6 Ways To Maximize Your HSA Contributions in 2025

Health savings accounts have advantages beyond saving for medical expenses

Fact checked by Vikki Velasquez

If you’re looking to save money that you can grow now and use for later, you could do a lot worse than a Health Savings Account (HSA). As the name implies, an HSA is a tax-advantaged savings account you can use to set aside pre-tax money for medical expenses. 

By using funds from an HSA to pay for deductibles, copayments, coinsurance, and other qualified medical expenses (not including insurance premiums), you can save money on out-of-pocket health care costs. Some people also use them as a means to save for retirement.

Here’s a look at how HSAs work and how you can make the most of one in 2025.

Key Takeaways

• Understand the contribution limits and deadlines for HSAs in 2025.
• Maximize HSA contributions through budgeting and saving strategies.
• Explore investment options for HSA funds to potentially grow savings.
• Learn how to use HSA funds for qualified medical expenses.
• Plan for future health care expenses and utilize an HSA for long-term savings.

HSA Contribution Limits and Deadlines for 2025

HSAs must be set up with a qualified HSA trustee, such as a bank, credit union, or insurance company. To be eligible for HSA contributions, you have to be enrolled in a high-deductible health plan (HDHP). You can’t be enrolled in Medicare or another health plan and can’t be claimed as dependent on someone else’s tax return.

Contributing to an HSA lowers your taxable income, which may reduce your tax burden. Like most tax-advantaged accounts, there are legal limits to how much you can contribute to an HSA each year. The maximum contribution limits for 2025 got a significant boost over last year. For 2025, you can contribute a maximum of $4,300 for self-only coverage and up to $8,550 for family coverage. 

Note

If you’re 55 or older at the end of the tax year, you can contribute an extra $1,000 on top of either the self or family coverage limits.

In general, you (or your employer) have until the tax filing deadline for the corresponding year to contribute to an HSA. So, for tax year 2025, the deadline to contribute is April 15, 2026.

Tax Benefits of HSAs

HSAs are a popular savings and investment tool thanks to several benefits. First off, all contributions are considered “pre-tax,” so every dollar you contribute reduces your taxable income. Any contributions an employer makes to your HSA (including contributions made through a cafeteria plan) are also excluded from your gross income.

Another major benefit is that HSA assets grow tax-free. So you don’t have to worry about capital gains or other taxes. Distributions are also tax-free when used for qualified medical expenses. 

Unlike flexible spending accounts (FSAs), which have a “use it or lose it” rule, you can keep money in an HSA for as long as you want. Finally, an HSA is portable, meaning it stays with you if you change employers or leave the workforce.

How To Maximize Your HSA Benefits and Contributions in 2025

If you’re wondering how to best use an HSA to maximize the benefits, consider the following strategies:

1. Contribute the Maximum Allowable Amount

The more you put into your HSA, the more your money grows. So, contribute the highest possible amount each year to get the most out of your HSA. Keep in mind that the maximum also includes employer contributions. This means if an employer puts money into your HSA, you need to subtract that from the annual maximum to find the amount you can contribute in a year.

2. Match Your Employer’s Contribution

If you’re fortunate enough to have an employer who contributes to your HSA, matching that contribution amount is one of the best uses of an HSA. Much like a 401(k), employer contributions to an HSA are essentially free money, making them a smart way to maximize the account value.

3. Contribute up to Your Health Plan Deductible

Your health plan deductible is the sum you must pay for medical expenses before your insurance kicks in. For 2025, the deductible must be at least $1,650 for an individual and $3,300 for a family. If you ever have to meet your deductible, using pre-tax dollars from your HSA will save you money overall and lower your taxable income. Note that some HDHPs have deductibles higher than the minimum, so check your plan for details.

4. Contribute up to the Out-of-Pocket Maximum for Your Health Plan

The out-of-pocket maximum, or out-of-pocket limit, is the most you must pay each year for covered medical expenses. After that amount, the insurance company pays 100% of covered health care services. For 2025, out-of-pocket costs are limited to $8,050 for individuals and $16,100 for families. Again, check your health plan for the exact out-of-pocket maximum. 

Based on annual contribution limits, it may take more than one year to reach this amount. But having pre-tax dollars set aside for your potential out-of-pocket expenses ultimately saves you money on health care expenses. 

5. Invest for the Long Term

Another smart way to use an HSA is to contribute the maximum amount you’re allowed and then not touch the money until retirement (or as long as possible). Kim Curtis, a certified financial planner and partner at Cerity Partners, emphasized, “These accounts are best used as retirement savings and investing vehicles rather than as ‘checking accounts.’ You can save in your HSA today while paying current medical out-of-pocket costs from wages or other savings.”

This is a smart strategy because the investments in your HSA grow tax-free. Let’s say you put $1,500 into your HSA each year for 20 years. That’s $30,000 from your own pocket. But if you leave that money invested for decades, it could grow to over $100,000. As a result, you would have at least $70,000 of tax-free funds to spend on medical care during retirement when you’re likely to need that money the most.

6. Reimburse Yourself for Qualified Medical Expenses

Foregoing spending from the HSA can be a great way to increase retirement savings, said Zack Marcotte, CFP and director of financial planning at Berkshire Money Management. “Invested funds can be later withdrawn, tax-free for qualified health care expenses. Until then, save receipts from medical expenses paid from other sources to reimburse yourself in the future without paying any taxes.” 

Tip

The best strategy (or strategies) for you depends on your age, income, average medical expenses per year, the details of your HDHP, and other factors. Talk to your financial advisor or CPA to determine the best approach for your HSA.

How To Invest Your HSA Funds

Funds in your HSA can be saved as cash. However, the key to maximizing this account for tax-free growth is to invest contributions wisely. Retirement investment options for HSAs are very similar to those of other retirement accounts, such as a 401(k) plan or an IRA. For example, HSA owners can invest in securities, including mutual funds, stocks, bonds, and ETFs.

“If you are going to invest, you need to assess your risk tolerance and time horizon as you would for any long-term investment,” said Tanya Rapacz, CFP and senior advisor at The Advisory Group. “Because you are counting on these funds for future medical expenses, you may want to steer clear of highly concentrated positions or anything too high risk.”

Marcotte advised further that “if your employer’s HSA doesn’t offer the ability to invest, you can freely roll your balance to a new provider.”

How To Use Your HSA Funds for Qualified Medical Expenses

You can receive tax-free distributions from your HSA to pay or be reimbursed for qualified medical expenses incurred after establishing the HSA. If you receive distributions for other reasons, the amount you withdraw will be subject to income tax and may be subject to an additional 20% tax. All distributions from an HSA must be reported using Form 8889.

You can use HSA funds to pay for deductibles, copayments, coinsurance, and other qualified medical expenses. Generally, qualified medical expenses include those you pay for yourself, your spouse, or someone you claim as a dependent on your tax return.

Common qualified medical expenses may include, but are not limited to: 

• Abortion
• Acupuncture
• Inpatient treatment for alcoholism
• Ambulance service
• Birth control
• Prosthetic limbs 
• Prosthetic teeth
• Body scan
• Eye exams
• Glasses or contact lenses
• Dental treatment
• Home care
• Hospital services 
• Prescription drugs, including insulin
• Hearing aids
• Lab fees
• Long-term care services 
• X-rays
• Wheelchairs

Whether you get reimbursed or use a distribution to pay directly, keep receipts—proper documentation may be required to prove adequate use of HSA funds.

Rapacz offered another way to use HSA funds for qualified medical expenses: the once-in-a-lifetime IRA-to-HSA rollover. Account holders can roll over $4,300 for single coverage or $8,550 for family coverage, plus the additional contribution limit if they’re over 55, and use the money for medical expenses tax-free.

Warning

Whether you get reimbursed or use a distribution to pay directly, keep receipts—proper documentation may be required to prove adequate use of HSA funds.

Planning for Future Health Care Expenses

Even for healthy people, medical costs typically increase with age. Older adults need more screenings and preventive checkups, often requiring dental or vision care. Despite making up only 31% of the population, people aged 55 and over accounted for 55% of total health spending in 2021. According to the Fidelity Retiree Health Care Cost Estimate, a single person aged 65 in 2024 may need approximately $165,000 saved (after tax) to cover health care expenses in retirement—a 5% increase from 2023.

With this in mind, HSAs become a critical tool in planning ahead for future medical expenses. “By having earmarked savings put away in an HSA, you can avoid an unpleasant surprise if a big health care bill comes up,” says Curtis. “And you’ll be paying it with tax-free money, reducing the impact of future health care costs.” 

After age 65, you can begin using your HSA, much like any retirement account. If you withdraw money from your HSA for non-medical expenses, the 20% penalty no longer applies. However, you will need to pay income tax on the withdrawals.

What is the HSA max for 2025?

The maximum amount that you can contribute to your health savings account in 2025 is $4,300 (for self-only coverage) or $8,550 (for family coverage). If you’re age 55 or older, you can contribute an additional $1,000 per year for a total of $5,300 (self) or $9,550 (family).

What is the “last-month rule” for HSAs?

Under IRS guidelines, you’re eligible to contribute to an HSA for the entire year as long as you are covered by an HDHP on the first day of the last month of the year (usually Dec. 1).

The Bottom Line

HSAs offer substantial benefits for managing health care expenses and building retirement savings. To make the most of HSAs in 2025, understand contribution limits, deadlines, investment options, and potential tax implications. Maximize contributions, consider employer matches, and use pre-tax dollars for qualified medical expenses. 

HSAs are powerful tools for financial security and flexibility. As health care expenses continue to rise, embracing HSAs’ potential can help you take control of your financial health today while using long-term growth to secure future stability.