HSA Limits Will Rise in 2024 -- But Will You Qualify for One of These Accounts?

By: Maurie Backman | Originally posted on the Motley Fool

Healthcare is one of those expenses that's pretty much unavoidable. So it's in your best interest to save for it so it doesn't drive you into debt. You could pump money into a regular savings account and dip into it as medical bills arise. But if you're able to contribute to a health savings account, or HSA, then it's in your best interest to do so.

HSA contributions are tax-free, so putting $1,000 into an HSA shields that much income from taxes. Plus, the money in your HSA that you don't need to withdraw right away can be invested so it grows into a larger sum over time.

Investment gains in HSAs are not subject to taxes. And withdrawals are tax-free when used to pay for qualified medical expenses.

HSA contribution limits are set to rise in 2024, which means you'll have even more opportunity to protect some of your earnings from taxes. But the minimum policy deductible needed to qualify for an HSA is also rising in the new year, so you'll need to make sure you're eligible to contribute to one of these accounts.

HSA requirements for 2024: What you need to know

To qualify for an HSA, your health plan must impose a minimum deductible and also have a maximum amount of out-of-pocket spending. In 2024, you'll be eligible to participate in an HSA if your health plan has:

• A minimum self-only deductible of $1,600 or a minimum family deductible of $3,200

• An out-of-pocket maximum of $8,050 for self-only coverage or $16,100 for family coverage

Keep in mind that if you currently have an HSA but your health plan isn't compatible in 2024, you don't lose your existing funds; you simply can't make new contributions. Also, you can withdraw from an existing HSA balance even if you're no longer enrolled in a health plan that's compatible with one.