The Internal Revenue Service (IRS) has announced the inflation-adjusted contribution limits for Health Savings Accounts (HSAs) and the maximum amounts for Excepted Benefit Health Reimbursement Arrangements (HRAs) for the year 2025.

According to Revenue Procedure 2024-25, the annual contribution limit for individuals with self-only coverage under a high deductible health plan (HDHP) will be $4,300 in 2025, up from $4,150 in 2024. For those with family coverage under an HDHP, the annual contribution limit will increase to $8,550, up from $8,300 in 2024.

Employees fund HSAs with pretax money, and the IRS contribution limits apply to both employee and employer contributions. Workers aged 55 and older can contribute an additional $1,000 annually to an HSA.

Jake Spiegel, a research associate at the Employee Benefit Research Institute, noted that “HSA contribution limits and HDHP deductibles are indexed to the Consumer Price Index (CPI), so as long as we experience higher-than-usual inflation, we will see larger increases than we did pre-pandemic.”

A “high deductible health plan” is defined by the IRS as a health plan with an annual deductible of at least $1,650 for self-only coverage or $3,300 for family coverage. Additionally, the annual out-of-pocket expenses, including deductibles and co-payments but excluding premiums, must not exceed $8,300 for self-only coverage or $16,600 for family coverage.

Excepted Benefit HRAs provide employers with a way to pay for additional medical expenses that primary group health plans do not cover, such as vision or dental care, coinsurance, and co-payments. These HRAs effectively serve as a reserve of funds that employees can use for medical expenses.

For 2025, employers can contribute up to $2,150 to a worker’s excepted benefit HRA, an increase from the $2,100 limit in 2024.

These adjustments reflect ongoing efforts to account for inflation and ensure that employees have sufficient resources to cover their healthcare expenses.

For more information on these benefits or any other group healthcare arrangements, consult with our health insurance brokers. We can help guide your company toward the menu of options that work best for your employees and contribute to a healthier, happier workplace.