Executive Summary

The IRS has issued its annual inflation adjustment to the HSA contribution limits for 2025. With inflation running at significantly lower levels than last year, the HSA contribution limit increases are not as unusually large as they were for 2024.

The 2025 HSA contribution limits are as follows:

• Individual Coverage: $4,300 ($150 increase)

• Family Coverage: $8,550 ($250 increase)

2025 Inflation Adjusted Amounts for HSAs and HDHPs

The IRS issues annual updates announcing HSA contribution limit increases. The cost-of-living adjustments are based on the Chained Consumer Price Index for All Urban Consumers (C-CPI-U).

The full guidance for the 2025 HSA limit increases is available here:

• IRS Revenue Procedure 2024-25

The much higher-than-normal inflation from 2022 (7%-8%) decreased significantly in 2023 and has settled at levels around 3% since mid-2023. The abnormally large HSA contributions increases we had last year ($300/$550) have therefore settled down in similar manner to more normal increases for 2025. The result is a $150 and $250 increase to the 2025 individual and family HSA contribution limits, respectively.

The 2025 calendar year HSA contribution limits are as follows:

• The 2025 HSA contribution limit for individual coverage increases by $150 to $4,300.

• The 2025 HSA contribution limit for family coverage (employee plus at least one other covered individual) increases by $250 to $8,550.

Note: The age 55+ catch-up contribution limit of $1,000 is fixed by law and does not adjust for inflation.

The annual IRS update also includes the 2025 calendar year minimum deductible and out-of-pocket maximums allowed for a plan to qualify as a §223 HSA-compatible high deductible health plan (HDHP), which is the required coverage for an individual to be eligible to make or receive HSA contributions.

The 2025 HDHP inflation adjusted amounts are as follows:

• The 2025 minimum deductible for individual coverage increases by $50 to $1,650.

• The 2025 minimum deductible for family coverage increases by $100 to $3,300.

• The 2025 maximum out-of-pocket limit for individual coverage increases by $250 to $8,300.

• The 2025 maximum out-of-pocket limit for family coverage will increase by $500 to $16,600.

Note: For the family HDHP coverage tier, any embedded individual deductible cannot be lower than the minimum family coverage deductible ($3,300 in 2025).

Reminder: First-Dollar Telehealth and Covid Testing/Coverage No Longer Available in 2025 Plan Year

The general rule is that an individual must meet two primary requirements to be HSA-eligible (i.e., eligible to make or receive HSA contributions):

1. Be covered by an HDHP; and

2. Have no disqualifying coverage (generally any medical coverage that pays pre-deductible, including Medicare).

HSA eligibility also requires that the individual cannot be claimed as a tax dependent by someone else.

One of the key requirements for all HDHP coverage is that the plan impose at least the statutory minimum deductible prior to paying for covered services. In 2025, that minimum deductible will increase to $1,650 for single coverage, and $3,300 for family coverage.

The main exception to the HDHP minimum deductible requirement is the ability of an HDHP to provide first-dollar coverage (i.e., not subject to the deductible) for preventive care without affecting HSA eligibility.

First Dollar Telehealth Coverage Expiration for Plan Years Beginning On or After January 1, 2025
The CARES Act, CAA 2022, and CAA 2023 all provided relief from the minimum deductible requirement for telehealth and other remote care services—regardless of whether such services were preventive—in light of the pandemic. Those legislative packages have allowed individuals to maintain HSA eligibility even where their HDHPs waives the deductible for any telehealth or other remote care.

• For more details: CAA 2023 Includes Two-Year HSA Telehealth Relief Extension Through 2024

This telehealth relief only extends to plan years beginning before January 1, 2025. Accordingly, for plan years beginning in 2025 (including 2025 calendar plan years), HDHPs must resume imposing the standard minimum statutory deductible for telehealth and other remote care services in order for covered participants to maintain their HSA eligibility.

First-Dollar Covid Testing/Treatment Expiration for Plan Years Ending On or After January 1, 2025
IRS relief since the start of the pandemic has also permitted HDHPs to waive the deductible and provide first-dollar coverage for medical care services and items related to testing and treatment of Covid. The IRS provided the relief to “eliminate potential administrative and financial barriers to testing for and treatment of COVD-19.”

• For more details: IRS Covid Testing/Treatment Guidance Addressing HDHP Status and HSA Eligibility

The IRS has stated in Notice 2023-37 that this relief remains available only for plan years ending on or before December 31, 2024. Accordingly, the relief providing that plans will not fail to maintain HDHP status if they cover Covid testing/treatment prior to satisfaction of the applicable minimum deductible will expire for the 2025 plan year. HDHPs will need to return to imposing the standard minimum deductible for Covid testing and treatment in 2025 in order for covered participants to maintain their HSA eligibility.

For more details on everything HDHP/HSA, see our Newfront Go All the Way With HSA Guide.

Disclaimer: The intent of this analysis is to provide the recipient with general information regarding the status of, and/or potential concerns related to, the recipient’s current employee benefits issues. This analysis does not necessarily fully address the recipient’s specific issue, and it should not be construed as, nor is it intended to provide, legal advice. Furthermore, this message does not establish an attorney-client relationship. Questions regarding specific issues should be addressed to the person(s) who provide legal advice to the recipient regarding employee benefits issues (e.g., the recipient’s general counsel or an attorney hired by the recipient who specializes in employee benefits law).