As 2024 comes to a close, it’s the perfect time to take a moment and assess your health savings strategy. If you have a Health Savings Account (HSA), be sure you’re taking full advantage of the contribution limits for 2024.

Why Contribute to Your HSA?

An HSA offers triple tax benefits:

Tax-Deductible Contributions: Contributions to your HSA are tax-deductible, which means you can reduce your taxable income for the year. These immediate tax savings can be significant, especially if you are in a higher tax bracket.

Tax-Free Growth: The funds in your HSA grow tax-free. Any interest or investment earnings you accumulate over time are not subject to taxes, allowing your savings to compound more efficiently.

Tax-Free Withdrawals: Withdrawals from your HSA for qualified medical expenses are also tax-free. This includes a wide range of expenses, from doctor visits and prescription medications to dental and vision care.

With this trio of benefits, an HSA isn’t just a great way to save for medical expenses — it can also serve as an excellent long-term savings vehicle, much like a retirement account. An HSA can even become a secondary retirement account once you reach age 65.

2025 HSA Contribution Limits

For 2025, the IRS has set the HSA contribution limits at $4,300 for individual coverage and $8,550 for family coverage. Additionally, individuals aged 55 and older can make an extra $1,000 catch-up contribution. Maxing out these contributions each year can significantly enhance your savings potential and provide substantial tax benefits.

How to Maximize Your Contributions for 2024

With the 2024 tax year coming to a close, a lump sum contribution is going to be your best bet for making sure you’re maximizing your savings. If your employer offers contributions to your HSA, be sure you understand how those count toward the annual limit. Remember, the deadline for making contributions to your HSA for the 2024 tax year is April 15, 2025 (the same as the federal tax deadline).

Looking Ahead to 2025

As we head into the new year, consider setting some financial goals around your HSA. Whether it’s increasing your contributions, planning for medical expenses in retirement, or investing the funds for long-term growth, an HSA can play a key role in your overall financial wellness.

Ascend is here to help! If you have questions about your HSA or need assistance with making contributions, don’t hesitate to stop by your nearest Ascend branch, schedule an appointment, or give us a call at 800-342-3086.