Health savings account usage, contribution limits continue to grow

By HPN Staff

Americans will be able to set aside more pre-tax dollars from their paychecks to pay for medical expenses next year, the Internal Revenue Service (IRS) recently announced. That comes as the availability of Health Savings Accounts (HSAs) continues to rise.

In 2026, the individual HSA contribution limit will increase to $4,400 from the current $4,300. For families, the contribution limit will rise to $8,750 from the current $8,550, according to guidance from the IRS.

Why it matters

Contributions within these limits are tax-deductible, which means individuals and families who use HSAs can reduce their taxable income and soften the impact of out-of-pocket medical expenses.

These features have incentivized adoption of HSAs, particularly as employers and employees deal with continued annual increases in health insurance premiums and deductibles.

From 2013 to 2023, average family premiums for employer-provided health insurance increased almost 50%, from $16,029 per year to $23,938 per year, according to the Kaiser Family Foundation (KFF).

Over the same period, the average family deductible also increased by almost 50%, from $2,491 per year in 2013 to $3,733 per year in 2023.

The bigger picture

Major changes to HSAs are being contemplated in Congress as part of a wider debate over tax policy.

According to KFF, those changes include doubling the HSA contribution limit for individuals making less than $75,000 per year and families making less than $150,000 per year.

Other changes could see the definition of HDHP expanded to cover more kinds of insurance plans and allow HSA account holders to use pre-tax dollars to pay for a portion of their health- and fitness-related expenses, such as gym memberships.

Additional context

While indexed to inflation, next year’s increase in HSA contribution limits is smaller than previous years, according to the Plan Sponsor Council of America (PSCA), a non-profit that represents employer-sponsored retirement programs.

Still, next year’s contribution limits will be 23% higher than they were in 2020, an increase of $850 per year for individuals and $1,650 for families, according to PSCA data.

In 2015, 24% of the private workforce had access to these accounts, according to the Bureau of Labor Statistics (BLS), and by 2024, this figure stood at 39%. By the end of last year, the number of HSAs had grown to 39 million with a total of $147 billion held in those accounts, according to Devenir, an HSA investment firm. 

More detail

Besides tax deductibility, contributions to an HSA can also be invested, similar to 401(k) plans and other retirement accounts.

To make tax-deductible contributions to an HSA, patients must be enrolled in a high-deductible health plan (HDHP), according to the Internal Revenue Code.

In 2026, this means an individual insurance plan with a deductible of at least $1,700 and an out-of-pocket maximum of $8,500. For families, the deductible must be at least $3,400 with an out-of-pocket maximum of $17,000.