How to Determine Maximum HSA Contribution?

When it comes to determining your maximum HSA contribution, there are a few key factors to consider. Your HSA contribution limit is set by the IRS each year, and for 2021 it is $3,600 for individuals and $7,200 for families. However, if you are 55 or older, you can contribute an additional $1,000 as a catch-up contribution.

To accurately calculate your maximum HSA contribution, you need to consider:

• Your health insurance plan type: Only individuals enrolled in a high deductible health plan (HDHP) are eligible to contribute to an HSA.
• The number of months you were enrolled in an HDHP: Your contribution limit is prorated based on the number of months you had an HDHP during the tax year.
• Your age: As mentioned, individuals 55 or older can make catch-up contributions.

By taking these factors into account, you can determine your maximum HSA contribution for the year. It's essential to stay within the contribution limit to avoid any tax penalties.

Determining your maximum HSA contribution may seem daunting at first, but it becomes easier once you understand the key factors. The IRS sets annual limits on HSA contributions, which for 2021 stood at $3,600 for individuals and $7,200 for families. If you're 55 years old or older, you can add an extra $1,000 as a catch-up contribution to help you save more for retirement healthcare costs.