How Much Can You Fund into an HSA Per Year?

Are you familiar with Health Savings Accounts (HSAs) and wondering how much you can contribute to one in a year? An HSA is a tax-advantaged savings account that allows individuals to set aside funds for medical expenses. It is designed to work in conjunction with a high-deductible health plan (HDHP) and offers various benefits.

The annual contribution limit for an HSA is set by the IRS and can vary each year. For 2021, the maximum contribution limits are:

• $3,600 for individuals
• $7,200 for families

Additionally, individuals who are aged 55 or older can make catch-up contributions of up to $1,000 per year. These contributions are typically made on a pre-tax basis, reducing the individual's taxable income.

It is essential to note that contributions to an HSA can be made by the account holder, their employer, or both. However, the total contributions made in a year must not exceed the set limits to avoid penalties.

HSAs offer a range of advantages, including:

• Tax savings on contributions
• Tax-free growth on the funds
• Withdrawals for qualified medical expenses are tax-free
• Portability, as the account stays with the individual even if they change jobs

Understanding the contribution limits and benefits of an HSA can help individuals make informed decisions about their healthcare savings strategy. By maximizing contributions within the set limits, individuals can take advantage of the tax benefits and build a robust healthcare fund for the future.

Are you curious about how much you can contribute to a Health Savings Account (HSA) each year? HSAs are an excellent tool for saving money on healthcare costs, offering tax advantages that help individuals budget for medical expenses.

For the 2023 tax year, the IRS allows up to $3,850 for individual coverage and $7,750 for family coverage to be contributed to an HSA. If you are 55 or older, you can also add a catch-up contribution of $1,000 to your HSA.

It’s important to understand that contributions can come from you, your employer, or a combination of both, but the total contributions cannot exceed the limits to avoid any penalties.

One great benefit of HSAs is that funds roll over year after year, so you won't lose your contributions if you don't use them in the current year. Furthermore, HSAs can be used to pay for a wide range of qualified medical expenses which include but are not limited to doctor visits, prescriptions, and even some over-the-counter medicines.