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 coverage you have and the year. For 2024, the IRS allows you to contribute up to $4,150 if you have individual coverage, or up to $8,300 if you have family coverage. These limits increase slightly most years to account for inflation, so the 2025 limits will be different.

You can only contribute to an HSA if you are enrolled in a High Deductible Health Plan (HDHP). If you switch to a different type of health insurance mid-year, your contribution limit for that year shrinks — you can only contribute for the months you were actually covered by an HDHP. The IRS has a special rule called the "testing period" that lets you contribute for the full year if you have HDHP coverage on December 1, but this rule has strict conditions.

Your employer may also limit how much you can contribute through payroll deductions, even if the IRS allows more. Check your plan documents or ask your benefits administrator what your specific limit is.

Key Takeaways

  • For 2024, the IRS limit is $4,150 for individual coverage or $8,300 for family coverage; these amounts change yearly and you should check the current year's limit before contributing.
  • You can only contribute if you are enrolled in a High Deductible Health Plan, and if you drop that coverage mid-year, your contribution limit for that year is reduced to only the months you were covered.
  • If you are age 55 or older, you can contribute an additional $1,000 per year as a catch-up contribution, on top of the standard limit.
  • Your employer's payroll system may have its own contribution cap that is lower than the IRS limit, so verify the actual amount you can defer from your paycheck.

How the contribution limit works if you change coverage mid-year

If you start the year with an HDHP but switch to a different health plan in June, you can only contribute to your HSA for the six months you had HDHP coverage. The IRS calculates this as a fraction of the annual limit. For example, if the annual individual limit is $4,150 and you had coverage for six months, your limit for that year would be roughly $2,075.

There is one exception: the "last-month rule" or testing period. If you have HDHP coverage on December 1 of the year, you can contribute the full annual amount for that entire year — even if you only had the plan for part of it. However, you must keep the HDHP coverage through December 31 of the following year, or you will owe taxes and penalties on the excess contribution. This rule is rarely worth the risk unless you are certain you will stay on the HDHP.

Catch-up contributions if you are 55 or older

If you turn 55 during the year, you become may be able to access to make an additional catch-up contribution of $1,000 per year. This is separate from the standard limit and applies only to you — your spouse cannot make a catch-up contribution unless they are also 55 or older.

You can start making catch-up contributions in the month you turn 55. If you turn 55 in March, you can contribute the catch-up amount for the remainder of that year and every year after. The $1,000 catch-up is not prorated if you turn 55 mid-year; you get the full amount for that year.

Contributing through payroll versus making direct deposits

You can contribute to an HSA in two ways: through payroll deductions (pre-tax) or by depositing money directly from your bank account. Payroll contributions are deducted before income tax is calculated, which saves you money on federal and state taxes. Direct contributions are also tax-deductible, but you have to claim the deduction on your tax return.

If you contribute through payroll, your employer's benefits system sets the contribution amount, and you cannot change it mid-year without a may have access to life event (marriage, birth of a child, loss of other coverage). Direct contributions have no such restriction — you can deposit money whenever you want, as long as you do not exceed the annual limit.

Many people use both methods: they contribute through payroll during the year and then make a direct deposit before the tax filing deadline to reach their target amount. Just make sure your total from both sources does not exceed the IRS limit for that year.

What happens if you contribute more than the limit

If you deposit more than the IRS allows, the excess amount is subject to income tax plus a 6 percent penalty tax each year it remains in the account. For example, if you contribute $500 over the limit and do not withdraw it, you owe income tax on that $500 plus a 6 percent penalty ($30) in the first year. If you leave it in the account for a second year, you owe another 6 percent penalty.

To fix an overcontribution, you must withdraw the excess amount plus any earnings it generated. The earnings are taxed as income, and the 6 percent penalty applies to the excess contribution itself. You have until the tax filing deadline (usually April 15) of the following year to catch and correct an overcontribution for the prior year.

If you discover an overcontribution after the deadline, you can still withdraw it, but the penalty will have already applied. Some HSA providers will help you identify overcontributions, but it is your responsibility to track your total contributions across all sources.

Employer contributions count toward your limit

Money your employer deposits into your HSA counts toward the annual limit. If your employer contributes $2,000 and you contribute $2,000 through payroll, you have reached the $4,000 mark and cannot contribute more (assuming the individual limit is $4,150). This is true even if your employer's contribution was a surprise or a one-time bonus.

Some employers make contributions on behalf of all employees with HDHP coverage, while others match a percentage of what you contribute. Either way, the total of employer plus employee contributions cannot exceed the IRS limit for that year. Your HSA provider should show you both amounts on your account statement so you can track the total.

Frequently Asked Questions

Can I contribute to an HSA if I have Medicare?

No. Once you enroll in Medicare, you are no longer may be able to access to contribute to an HSA, even if you also have an HDHP. You can keep the money already in your HSA and use it for medical expenses, but you cannot add new contributions. If you enroll in Medicare before age 65, the same rule applies.

What if I have two jobs and both offer HDHP coverage?

You still have only one annual contribution limit. If both employers offer HSAs, you can choose which one to use, or you can split contributions between them — but the total cannot exceed the IRS limit. Make sure both employers know about each other's contributions so you do not accidentally exceed the limit.

Can I contribute to an HSA after the year ends?

You can make contributions for a prior year until the tax filing deadline (usually April 15 of the following year). For example, you can contribute to your 2024 HSA until April 15, 2025. After that date, any contributions are treated as contributions for the current year and count toward that year's limit.

Do I have to contribute the full amount every year?

No. You can contribute any amount up to the limit, or nothing at all. There is no minimum contribution, and you do not lose unused contribution room if you do not use it in a given year. The money rolls over indefinitely, so you can let it accumulate.