The IRS recently announced the 2025 cost-of-living adjustments to the applicable dollar limits for the following accounts and plans:
- Health savings accounts (HSAs)
- High-deductible health plans (HDHPs)
- Excepted benefit health reimbursement arrangements (HRAs).
All the dollar limits currently in effect for 2024 will change for 2025 (except the HSA catch-up contribution for individuals ages 55 and older as this limit is not subject to cost-of-living adjustments).
High Deductible Health Plan Policy Limits
2025 Minimum Deductible
- Individual: $1,650 (2024 - $1,600)
- Family: $3,300 (2024 - $3,200)
2025 Maximum Out of Pocket Limit
- Individual: $8,300 (2024 - $8,050)
- Family: $16,600 (2024 - $16,100)
Health Savings Account Limits
2025 Maximum HSA Contribution
- Individual: $4,300 (2024 - $4,150)
- Family: $8,550 (2024 - $8,300)
Over Age 55 Catch-Up Contribution
Excepted Benefit HRA Limit
High Deductible Health Plan Policy Limits
Any amount can be contributed to an HSA up to the maximum annual contribution, regardless of the actual deductible of the underlying HDHP plan.
The general rule is that HSA contributions are calculated on a monthly basis (reflecting the number of months that an individual was covered under a qualified HDHP).
For individuals covered under an HDHP for only a portion of the calendar year, there is a special rule that allows them to contribute the full annual maximum to an HSA. This is known as the “full contribution rule.” The catch is that individuals who make contributions in reliance upon the full contribution rule must remain HSA-eligible (that is, covered under an HDHP without other disqualifying coverage) during a 13-month period from December of that year through the following calendar year) to avoid adverse tax consequences.
A Reminder about Embedded Deductibles
HDHPs are typically structured with an aggregate family deductible. This means that when any dependents are covered on the plan, the deductible applies collectively to all family members, and the individual deductible is not taken into account.
However, there are some plans that have an embedded individual deductible. Notably, California law requires that HDHPs have an embedded individual deductible. This means that once an individual covered on a family plan meets the embedded individual deductible, the plan coinsurance would start to pay for that individual (but not for other family members). In order for such a plan to remain a qualified HDHP, the embedded individual deductible must be at least the minimum family deductible outlined above. As an example, the minimum embedded individual deductible on a family plan in 2025 would be $3,300.
References
Revenue Procedue 2024-25
