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2025 Contribution Limits for HRAs and HSAs Announced

June 17, 2024
Bay Area Health Insurance
Bay Area Health Insurance
Bay Area Health Insurance

With healthcare expenses increasing annually, consumers can benefit from every available resource. There’s good news for those using a Health Savings Account (HSA) or an Excepted Benefit Health Reimbursement Arrangement (HRA) to help with health insurance premiums and out-of-pocket costs: The contribution limits that offer certain tax advantages have been raised this year.

The Internal Revenue Service (IRS) has recently announced the updated, inflation-adjusted contribution limits for HSAs and the maximum amounts for HRAs for the year 2025.

For individuals with self-only coverage under a high deductible health plan (HDHP), the HSA contribution limit will be $4,300 in 2025, up from $4,150 in 2024. Those with family coverage under an HDHP will see their contribution limit increase to $8,550 from $8,300 in 2024. The IRS specifies that a “high deductible health plan” must have 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, cannot exceed $8,300 for self-only coverage or $16,600 for family coverage.

HSAs are funded with pretax dollars, and the IRS limits include both employee and employer contributions. Employees who are 55 or older can make an additional $1,000 catch-up contribution annually.

Excepted Benefit HRAs provide employers with a way to reimburse employees for medical expenses not covered by their primary group health plans, such as vision or dental care, coinsurance, and co-payments. These HRAs serve as a supplementary fund for medical expenses. For 2025, the contribution limit for employers to an employee’s excepted benefit HRA will increase to $2,150, up from $2,100 in 2024.

The contribution limits for HSAs and the deductible requirements for HDHPs are linked to the Consumer Price Index (CPI), so increases in contribution limits are typical during periods of inflation. These adjustments aim to address inflation and ensure employees have sufficient resources to manage their healthcare costs.

For more information about these benefits or other group healthcare arrangements, please contact our knowledgeable health insurance specialists at Bay Area Health Insurance. We can help your company choose the best options for your employees, promoting a healthier and more satisfied workforce.

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