Couples age 55 or older can soon contribute $10,000 a year to Health Savings Accounts

FRIDAY, May 19, 2023 (HealthDay News) -- New IRS guidance will allow older couples in the United States to contribute more than $10,000 to tax-free health savings accounts (HSA) next year.

Under the new guidelines announced this week, for those younger 55 years, individuals can contribute up to $4,150 annually to their HSAs, NBC News reported Friday. That is a 7.8 percent increase. Families can contribute a maximum of $8,300 annually. The new annual contribution limit is especially high for people 55 years and older -- $10,300 for couples and $5,150 for individuals not on Medicare.

Rising inflation is the reason for this large cost-of-living adjustment, said Kevin Robertson, senior vice president and chief revenue officer at HSA Bank. It is also a psychological milestone because of the heft of a contribution this big.

Many people do not take advantage of this opportunity to put away money for future medical expenses, he noted. The majority of people are not maxing out their contributions each year, Robertson said. The new contribution limits "will allow people to think about their needs ... and get people more engaged."

The limit for older people includes a $1,000 catch-up contribution that those 55 years and older are allowed to set aside annually, NBC News reported. The average HSA created in 2005 now contains more than $50,000, according to data from independent investment adviser Devenir.

"Contributions are made pretax, the money in the accounts grows tax-free, and withdrawals for qualified medical expenses are tax-free," the Society for Human Resource Management explained.

NBC News Article