HSA Eligibility and Contributions in 2024

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HSA Eligibility and Contributions in 2024

A Health Savings Account (HSA) may offer numerous benefits to individuals seeking a flexible and tax-advantaged way to save for medical expenses. One key advantages of an HSA is that contributions are tax-deductible, allowing for a reduction in taxable income while setting aside money for future healthcare needs. Moreover, HSAs are not limited to employer-sponsored plans; individuals can open and fund their own HSA accounts independently, making them a viable option for those who are self-employed or not covered by an employer’s health insurance plan.

There have been several important updates regarding Health Savings Accounts (HSAs) for the upcoming year, 2024. Here are some highlights:

1. Increased Contribution Limits: In 2024, the annual ceilings on deductible contributions to HSAs will experience a substantial increase. Account owners with self-only coverage will be able to contribute up to $4,150, while those with family coverage can contribute up to $8,300 annually. Additionally, individuals born before 1970 can make an extra catch-up contribution of $1,000. These higher contribution limits may offer greater flexibility for saving on healthcare expenses while enjoying valuable tax benefits.

2. Eligibility Requirements: Eligibility for HSAs remains restricted. To qualify, you must have a High-Deductible Health Plan (HDHP). For the year 2024, the minimum policy deductible for self-only coverage will be $1,600, and for family coverage, it will be $3,200. It’s essential to ensure that your health insurance plan meets these deductible thresholds to be eligible for HSA contributions.

3. Out-of-Pocket Costs Limit: To maintain HSA eligibility, there’s a cap on out-of-pocket costs, including copayments and other expenses. In 2024, these costs cannot exceed $8,050 for individual coverage and $16,100 for family coverage. These limits are designed to provide a safety net against excessive healthcare expenses while preserving the benefits of an HSA.

4. Medicare Enrollees and HSA Contributions: It’s important to note that individuals enrolled in Medicare are not eligible to contribute to an HSA. Medicare coverage does not align with the requirements of an HDHP, making Medicare enrollees ineligible for HSA contributions. If you are approaching Medicare eligibility, consider adjusting your savings strategy accordingly.

These changes to HSA contribution limits and eligibility criteria in 2024 may positively impact your ability to save for healthcare expenses while benefiting from valuable tax advantages. Please contact us if you have any questions regarding your HSA contributions.