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CLIENT ALERT: IRS Releases 2025 HSA Contribution Limits and HDHP Deductible and Out-of-Pocket Limits

May 13, 2024

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IRS Releases 2025 HSA Contribution Limits and HDHP Deductible and Out-of-Pocket Limits

In Rev. Proc. 2024-25, the IRS released the inflation adjusted amounts for 2025 relevant to Health Savings Accounts (HSAs) and high deductible health plans (HDHPs). The table below summarizes those adjustments and other applicable limits.

  2025 2024 Change
Annual HSA Contribution Limit (employer and employee) Self-only: $4,300 Family: $8,550 Self-only: $4,150 Family: $8,300 Self-only: +$150 Family: +$250
HSA catch-up contributions (age 55 or older) $1,000 $1,000 No change
Minimum Annual HDHP Deductible Self-only: $1,650 Family: $3,300 Self-only: $1,600 Family: $3,200 Self-only: +$50 Family: +$100
Maximum Out-of-Pocket for HDHP (deductibles, co-payment & other amounts except premiums) Self-only: $8,300 Family: $16,600 Self-only: $8,050 Family: $16,100 Self-only: +$250 Family: +$500

Out-of-Pocket Limits Applicable to Non-Grandfathered Plans

The ACA’s out-of-pocket limits for in-network essential health benefits have also been announced and have decreased for 2025.

  2025 2024 Change
ACA Maximum Out-of-Pocket Self-only: $9,200 Family: $18,400 Self-only: $9,450 Family: $18,900 Self-only: -$250 Family: -$500

Note that all non-grandfathered group health plans must contain an embedded individual out-of-pocket limit within family coverage if the family out-of-pocket limit is above $9,200 (2025 plan years) or $9,450 (2024 plan years). Exceptions to the ACA’s out-of-pocket limit rule have been available for certain non-grandfathered small group plans eligible for transition relief (referred to as “Grandmothered” plans) since policy years renewed on or after January 1, 2014. Each year, CMS has extended this transition relief for any Grandmothered plans that have been continually renewed since on or after January 1, 2014. However, in its March 23, 2022 Insurance Standards Bulletin, CMS announced that the limited nonenforcement policy will remain in effect until CMS announces that such coverage must come into compliance with relevant requirements. Thus, we will no longer see annual transition relief announced.

Next Steps for Employers

As employers prepare for the 2025 plan year, they should keep in mind the following rules and ensure that any plan materials and participant communications reflect the new limits:

All non-grandfathered plans (whether HDHP or non-HDHP) must cap out-of-pocket spending at $9,200 for any covered person. A family plan with an out-of-pocket maximum in excess of $9,200 can satisfy this rule by embedding an individual out-of-pocket maximum in the plan that is no higher than $9,200. This means that for the 2025 plan year, an HDHP subject to the ACA out-of-pocket limit rules may have a $8,300 (self-only) / $16,600 (family) out-of-pocket limit (and be HSA-compliant) so long as there is an embedded individual out-of-pocket limit in the family tier no greater than $9,200 (so that it is also ACA-compliant).

Releases 2024 HSA Contribution Limits and HDHP Deductible and Out-of-Pocket Limits

In Rev. Proc. 2023-23, the IRS released the inflation adjusted amounts for 2024 relevant to Health Savings Accounts (HSAs) and high deductible health plans (HDHPs). The table below summarizes those adjustments and other applicable limits.

  2024 2023 Change
Annual HSA Contribution Limit (employer and employee) Self-only: $4,150 Family: $8,300 Self-only: $3,850 Family: $7,750 Self-only: +$300 Family: +$550
HSA catch-up contributions (age 55 or older) $1,000 $1,000 No change
Minimum Annual HDHP Deductible Self-only: $1,600 Family: $3,200 Self-only: $1,500 Family: $3,000 Self-only: +$100 Family: +$200
Maximum Out-of-Pocket for HDHP (deductibles, co-payment & other amounts except premiums) Self-only: $8,050 Family: $16,100 Self-only: $7,500 Family: $15,000 Self-only: +$550 Family: +$1,100

Out-of-Pocket Limits Applicable to Non-Grandfathered Plans

The ACA’s out-of-pocket limits for in-network essential health benefits have also been announced and have increased for 2024.

  2024 2023 Change
ACA Maximum Out-of-Pocket Self-only: $9,450 Family: $18,900 Self-only: $9,100 Family: $18,200 Self-only: +$350 Family: +$700

Note that all non-grandfathered group health plans must contain an embedded individual out-of-pocket limit within family coverage if the family out-of-pocket limit is above $9,450 (2024 plan years) or $9,100 (2023 plan years). Exceptions to the ACA’s out-of-pocket limit rule have been available for certain non-grandfathered small group plans eligible for transition relief (referred to as “Grandmothered” plans) since policy years renewed on or after January 1, 2014. Each year, CMS has extended this transition relief for any Grandmothered plans that have been continually renewed since on or after January 1, 2014. However, in its March 23, 2022 Insurance Standards Bulletin, CMS announced that the limited nonenforcement policy will remain in effect until CMS announces that such coverage must come into compliance with relevant requirements. Thus, we will no longer see annual transition relief announced.

Next Steps for Employers

As employers prepare for the 2024 plan year, they should keep in mind the following rules and ensure that any plan materials and participant communications reflect the new limits:

All non-grandfathered plans (whether HDHP or non-HDHP) must cap out-of-pocket spending at $9,450 for any covered person. A family plan with an out-of-pocket maximum in excess of $9,450 can satisfy this rule by embedding an individual out-of-pocket maximum in the plan that is no higher than $9,450. This means that for the 2024 plan year, an HDHP subject to the ACA out-of-pocket limit rules may have a $8,050 (self-only) / $18,900 (family) out-of-pocket limit (and be HSA-compliant) so long as there is an embedded individual out-of-pocket limit in the family tier no greater than $9,450 (so that it is also ACA-compliant).

About the Authors. This alert was prepared for Manquen Vance by Marathas Barrow Weatherhead Lent LLP, a national law firm with recognized experts on the Affordable Care Act. Contact Stacy Barrow or Nicole Quinn-Gato at sbarrow@marbarlaw.com or nquinngato@marbarlaw.com.
The information provided in this alert is not, is not intended to be, and shall not be construed to be, either the provision of legal advice or an offer to provide legal services, nor does it necessarily reflect the opinions of the agency, our lawyers or our clients. This is not legal advice. No client-lawyer relationship between you and our lawyers is or may be created by your use of this information. Rather, the content is intended as a general overview of the subject matter covered. This agency and Marathas Barrow Weatherhead Lent LLP are not obligated to provide updates on the information presented herein. Those reading this alert are encouraged to seek direct counsel on legal questions. © 2024 Marathas Barrow Weatherhead Lent LLP. All Rights Reserved.

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