Don’t Forget to Max Out Your Health Savings Account: Annual HSA Contribution Limits

Health Savings Account Medical SymbolI’ll be writing a couple of checks out in the next few weeks to my credit union.  This will bring our HSA contributions for last year and this year up to the maximum limits for each year.  The process is pretty painless (good people at that credit union), and I know I’ll leave with a good feeling about how much I’ll be saving in taxes.

If you’ll remember, I opened our HSA (health savings account) with a local credit union a few years ago.  I did this since I’d become self-employed and become eligible for an HSA because my high deductible health insurance plan was compatible.

Now, each year before I file my taxes, I make sure my HSAs have been maxed out for the previous tax year. That’s right, you have until April 15th or when you Annual HSA Contribution Limits | Health Spending Account | Tax Tips | Healthcare Costs | ACA | Obamacare | Trumpcare | Tax Planningfile your taxes (which ever comes first) to make a contribution to you HSA for the previous tax year.

Before I move on to the HSA contribution limits, I think I better explain how they work. A Health Savings Account is a tax-advantaged savings account for health care expenses. From a tax perspective, it acts very similar to a Roth IRA, except you get to use the money in the account now (vs in retirement) for qualifying health care expenses.

The money you place into the HSA can be deducted from your income (line 25 of your Form 1040). The money can also be invested, and any growth you experience will not be taxed. You can see why this is a popular savings tool.

HSA Contribution Limits

  • For 2017, the HSA contribution limit were upped to $3,400 for individuals and remained at $6,750 for families. The catch-up limit is still at an additional $1,000.
  • For 2016, the HSA contribution limit for individuals remained the same at $3,350, but was upped to $6,750 for families. The catch-up limit is still at an additional $1,000.
  • For 2015, the HSA contribution limits were upped to $3,350 for individuals and $6,650 for families. The catch-up limit is still at an additional $1,000.
  • For 2014, the HSA contribution limits were upped to $3,300 for individuals and $6,550 for families. The catch-up limit is still at an additional $1,000.
  • For 2013, the HSA contribution limits were upped to $3,250 for individuals and $6,450 for families. The catch-up limit is still at an additional $1,000.
  • For 2012, the HSA contribution limits were raised to $3,100 for individuals and $6,250 for families. Don’t forget, in each year there is a “catch-up” limit. Therefore if you happen to be 55 or older you can contribute an additional $1000 to your HSA. Lucky you.
  • For tax year 2011, the annual HSA contributions limit remained the same as they were the previous year: $3,050 for individuals and $6,150 for families that own an HSA. If more than one person is on your health insurance plan, then it’s a family plan.

Here’s a pretty chart to quickly check the limits.

Tax Year
  1. What if I wasn’t on the HSA eligible plan all year? As long as you are eligible for at least the last month of the year (by December 1), and you keep the eligible plan throughout the next year, you can still contribute the maximum. See IRS Pub 969 for more.
  2. What if my employer manages my plan? If you are HSA eligible, but your employer manages everything, check with human resources to see how much was contributed on your behalf last year. You can make additional contributions directly to bring your contributions up to the maximums.

Lastly, remember that contributions to an HSA, unlike those contributed to a Flexible Spending Account, can be rolled over to subsequent years. There is no use-it-or-lose-it rule.

Have you contributed to your HSA for last year yet? How quickly do you make this year’s contribution?

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  1. William Cowie says:

    The key requirement for an HSA is a high-deductible health care plan. Before our retirement, my wife and I had both (high-deductible plan and HSA) for several years. I only wish we knew about this earlier. I still have the bulk of that money in the account, while my wife used most of it since retiring. 

    The only drawback is you don’t really earn all that much — it is, after all, a savings account. But that’s a small drawback in exchange for the tax break. I think of the tax savings as the interest earned. 

    Great post.

  2. deaconhayes says:

    We contribute to our HSA bi-weekly, but I will have to see what we can do to max it out because we are currently using pre-tax dollars out of my paycheck.

  3. Your statement
    “What if I wasn’t on the HSA eligible plan all year? If, for example, you became self-employed in June of last year and enrolled in an HSA eligible plan in July, then you will have six months’ worth of contributions to make. Therefore, your limit will be cut in half. The limit is essentially prorated. See IRS Pub 969 for more.”
    is incorrect.  Read IRS Pub 969 regarding the “Last Month Rule” on page 5. If you are eligible on the first day of the last month of the tax year, then you are considered eligible for the entire year.

  4. I really wish there was some sort of HSA calculator I could use to estimate how much I would need to save each year.

  5. AverageJoeMoney says:

    My question: do you feel like an HSA has been worth it for your family? I know it all depends on your personal health (pays off well if you don’t have many claims)…but I’m curious about your personal experience.

    • Philip Taylor says:

       @AverageJoeMoney I’m assuming you’re referring to an HSA eligible health insurance plan being worth it? As compared to a low-deductible plan? If so, I’d have to say the plan is exactly what we need. Although, to be fair I haven’t done a true costs comparison. My monthly insurance premiums are around $350, with our $10k deductible plan. A cadillac plan would be double that, maybe? So, given we go see the doc 6 or 7 times a year at roughly $100 a pop, the high-deductible plan is winning after 3 or 4 months. I did a post a while back with a friend who was looking at this decision: In his scenario, the high-deductible plan was projected to save him hundreds a year, even under the worst case scenario.

      • AverageJoeMoney says:

         @Philip Taylor
         That’s exactly what I was curious about. I like the cost comparison w/ your friend. Interesting…I would have never thought he’d come out ahead even under worst case scenario conditions.

        • Philip Taylor says:

           @AverageJoeMoney Yeah, the monthly price differences for a high-deductible plan vs a regular plan can be quite drastic.