Annual contribution limits are set by the IRS and change each year

The amount you can contribute to a Health Savings Account depends on the type of health insurance plan you have and whether you cover yourself alone or your family. The IRS sets these limits annually, and they typically increase slightly each year to account for inflation.

For 2024, if you have individual coverage under a high-deductible health plan, you can contribute up to $4,150. If you have family coverage, the limit is $8,300. These numbers change most years — the IRS announces the new limits in the fall for the following year. You can find the current year's limits on the IRS website or ask your HSA provider what applies to you right now.

If you are 55 or older, you can contribute an additional $1,000 per year on top of the standard limit. This catch-up contribution is available only to you, not to your spouse, even if they are also 55 or older — they would have their own separate $1,000 catch-up room.

Key Takeaways

  • The IRS sets contribution limits each year: $4,150 for individual coverage and $8,300 for family coverage in 2024, with increases expected in future years.
  • You can only contribute to an HSA if you are enrolled in a high-deductible health plan; other insurance types do not allow HSA contributions.
  • If you turn 55 during the year, you can add the catch-up contribution for that year and every year after, even if you retire.
  • Contributions made after the tax year ends can still count if you file your taxes by the deadline, but you must track which money went into which tax year.
  • If you contribute more than the limit, you owe income tax on the overage plus a 6 percent penalty tax each year the money stays in the account.

When you can and cannot contribute

You can only contribute to an HSA during the months you are enrolled in a high-deductible health plan. The moment you switch to a different type of insurance — a standard PPO, an HMO, Medicare, or Medicaid — you stop being able to contribute, even if you keep the HSA account open.

If you change plans mid-year, your contribution limit for that year is reduced. The IRS uses a monthly calculation: you can contribute 1/12 of the annual limit for each month you were covered by a high-deductible plan. If you had individual coverage for six months and family coverage for six months, you would calculate the limit for each period separately and add them together.

There is one exception called the "last-month rule." If you are covered by a high-deductible plan on December 1 of any year, you can contribute the full annual limit for that year, even if you were not covered for the entire year. However, if you use this rule, you must stay enrolled in a high-deductible plan through December 31 of the following year, or you will owe back taxes and penalties on the overage.

How to track contributions across employers

If you change jobs or have more than one HSA account, you are still limited to one total contribution limit per year. The limit applies to all your HSA accounts combined, not to each account separately.

This means if your old employer contributed $2,000 to your HSA and your new employer contributes $1,500, you can only add $650 of your own money if the individual limit is $4,150. You are responsible for tracking the total across all accounts and reporting it correctly on your tax return. If you go over, the IRS will charge you the 6 percent penalty on the excess amount for each year it sits in the account.

When you leave a job, your HSA stays yours — it does not disappear. You can roll it to a new HSA at a different bank or financial institution, or you can leave it where it is and continue to use it. Either way, the money you already contributed counts toward your lifetime total, and you cannot contribute it again.

Contributions made after the tax year ends

You can contribute to your HSA for a past tax year until the tax filing deadline, usually April 15. This is called a "catch-up contribution" for tax purposes, and it works the same way as any other contribution — the money counts toward that earlier year's limit, not the current year's limit.

You must keep careful records of which contribution belongs to which tax year. If you contribute $2,000 in March for the prior year and $3,000 in April for the current year, your HSA provider may not automatically sort them correctly. You need to specify the tax year when you make the contribution, and you should confirm in writing that the provider recorded it correctly.

If you file your taxes and claim a deduction for a contribution you have not yet made, you must actually deposit that money by the filing deadline or amend your return. The IRS will assess penalties and interest if the contribution was not made by the time you claimed it.

What happens if you contribute too much

If you put more money into your HSA than the annual limit allows, you owe income tax on the excess amount plus a 6 percent penalty tax. The penalty applies every year the excess money remains in the account, so the longer you leave it there, the more you owe.

To fix an overage, you can withdraw the excess amount plus any earnings it generated. You report this on Form 8889 when you file your taxes. If you withdraw the excess by the tax filing deadline, you avoid the 6 percent penalty, but you still owe income tax on the earnings. If you do not withdraw it, the 6 percent penalty keeps adding up each year.

Some HSA providers offer a "self-correction" process where you can report and fix an overage without waiting for the IRS to catch it. This is usually faster and less expensive than dealing with an audit, so contact your provider if you realize you have contributed too much.

Employer contributions and your personal limit

Money your employer contributes to your HSA counts toward your annual limit. If your employer puts in $3,000 and the individual limit is $4,150, you can only add $1,150 of your own money that year. Some employers contribute on a per-paycheck basis, so you need to track the running total throughout the year to know how much room you have left.

If your employer makes a contribution after you have already maxed out your own contributions, you may end up with an overage. Ask your employer's benefits department to confirm the total they plan to contribute before the year ends so you can adjust your personal contributions accordingly.

Employer contributions are not taxable income to you, and they do not count toward your income for tax purposes. Only your own contributions reduce your taxable income.

Frequently Asked Questions

Can I contribute to an HSA if I am on Medicare?

No. Once you enroll in Medicare, you are no longer may be able to access to contribute to an HSA, even if you keep the account open. You can still withdraw money from your HSA for may have access to medical expenses, but you cannot add new money. If you contribute after enrolling in Medicare, you will owe income tax plus a 20 percent penalty on the excess.

What if I contribute to my HSA and then lose my high-deductible plan coverage?

The contribution still counts and you keep the money. You simply cannot make any new contributions while you are not covered by a high-deductible plan. Once you re-enroll in a high-deductible plan, you can start contributing again up to the remaining limit for that year.

Do I have to contribute the full limit every year?

No. You can contribute any amount up to the limit, or nothing at all. There is no minimum contribution required. However, if your employer offers a match or contribution, you may want to contribute enough to capture that benefit, since it is essentially assistance programs.

Can my spouse and I share one HSA?

No. Each person must have their own separate HSA. If you both have family coverage under the same plan, you each have your own account and your own contribution limit. Your employer may contribute to both accounts, but the total across both cannot exceed the family limit for that year.

What if I contributed too much by accident — can I get the money back?

Yes, but you need to act quickly. Withdraw the excess amount plus earnings by the tax filing deadline to avoid the 6 percent penalty. You will still owe income tax on the earnings, but the penalty goes away. After the deadline, the penalty applies every year the money stays in the account.