Definition of Health Savings Account (HSA)

What is a Health Savings Account (HSA)?

A health savings account, also known as an HSA, is an employee benefit program that lets employees contribute pre-tax money through payroll deductions to pay for certain health care expenses.

HSAs are available only with high-deductible health plans. Employers may make contributions to their employees’ HSAs, and will not be required to pay wage taxes on those contributions.

When can I set up an HSA plan?

If your company is offering an HSA-compatiblehigh-deductible health plan (HDHP), you can set up an HSA  at any time. Your HSA plan’s start date depends on when you finish setting up your plan. Employers must finish setting up the plan:

  • on or before the 15th of the month, your plan will start on the 1st of the next month.
  • after the 15th of the month, your plan will start on the first of the month after the next.
Employees will have until the 25th  of the month to start on the first of the next month. If the enrollment is completed after the 25th, then the plan will start on the first of the following month.

What are the contribution limits for an HSA?

The IRS places limits on the maximum allowable annual HSA contributions.

HSA Contribution Limits

The table below outlines the single and family annual contribution limits for  HSA. Keep in mind that the total of employee and employer contributions cannot exceed this amount.

2023
Single (no dependents) $3850
Family (dependents included) $7750
2022
Single (no dependents) $3650
Family (dependents included) $7300
2021
Single (no dependents) $3600
Family (dependents included) $7200

 

An employee’s dependents must be enrolled in the employee’s medical insurance in order to qualify for the family contribution limit.

Catch-Up Contributions

Participants age 55 or older may make additional contributions beyond the maximums above.

  • Single: 1000
  • Family: 1000