An advantage of inflation: You can contribute more to your health savings account.

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The IRS limits how much you can put in a tax-advantaged health savings account each year, and that amount is adjusted every year to account for inflation. Surging inflation means that contribution limits have risen 7.8% for people with healthcare plans covering individuals, and 7.1% for families, the IRS announced in late April.1

Health savings accounts give people and their employers a way to save money that can later be withdrawn to cover qualified medical expenses.2 Any contributions made to your HSA are deducted from your income for tax purposes, saving you money at tax time, and any interest or earnings you get from your HSA are also tax-free. 

You’re only eligible for an HSA if you have a high-deductible health plan as defined by the IRS—that is a plan that requires you to spend large amounts of money out of your own pocket before insurance pays anything.1

Inflation adjustments are a double-edged sword for HSA contributors, since while the contribution amount has increased, so too have the requirements for deductibles and out-of-pocket expenses. That means health plans must be less generous in order to qualify as a “high-deductible health plan.” 

The change in maximum contribution levels won’t affect most people, those with HSAs typically contribute far less than the maximum anyway, according to a 2021 analysis by the Employee Benefits Research Institute.3

However, the increased limits are an opportunity for people who want to take full advantage of their HSAs. Experts say making maximum contributions to an HSA can pay off, especially if you anticipate having significant medical expenses in the future. Unlike with Flexible Spending Accounts, you can keep the money in your HSA if it hasn’t been spent by the end of the year.

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