New HSA and HDHP Limits

On May 1, 2025, the IRS released Rev. Proc. 2025-19, announcing the 2026 health savings accounts (HSAs) and high deductible health plans (HDHPs) inflation-adjusted amounts, which are:

  • Annual HSA contribution limits:
    • Self-coverage only: $4,400 ($100 increase from 2025)
    • Family coverage: $8,750 ($200 increase from 2025)
  • Annual catch-up contribution maximum remains unchanged at $1,000 for HSA-eligible individuals age 55 or older
  • Minimum annual HDHP deductible:
    • Self-coverage only: $1,700 ($50 increase from 2025)
    • Family coverage: $3,400 ($100 increase from 2025)
  • Maximum annual HDHP out-of-pocket expenses (deductibles, copayments, and other nonpremium amounts):
    • Self-coverage only: $8,500 ($200 increase from 2025)
    • Family coverage: $17,000 ($400 increase from 2025)

This applies to all HDHPs regardless of whether they’re for essential health benefits (EHBs) or not.

These amounts differ from the Affordable Care Act (ACA) maximum out-of-pocket limits for plan years beginning in 2026 (proposed by the Department of Health and Human Services in October 2025) for non-grandfathered health plans, which are:

  • Self-coverage only: $10,150 ($950 increase from 2025)
  • Family coverage: $20,300 ($1,900 increase from 2025)

Unlike the HDHP out-of-pocket maximums, the ACA out-of-pocket maximums apply to in-network EHBs.

Employees can open a health savings account (HSA) at a financial institution, make contributions to their account, and/or receive employer contributions on their behalf, but they first need to be eligible. Eligibility means the employee meets all four of the following conditions:

  1. The employee has qualifying high deductible health plan (HDHP) coverage;
  2. The employee does not have any disqualifying non-HDHP health coverage;
  3. The employee is not enrolled in Medicare; and
  4. The employee cannot be claimed as a dependent on someone else’s tax return.

The four eligibility conditions apply on a month-to-month basis. That means that the employee must meet the four conditions above as of the first day of the month to make or receive contributions for that month. Contributions attributable to a particular month can be deposited in the HSA until the employee’s tax return is due for that year (usually April 15 following the end of the tax year).

To make or receive HSA contributions, the employee must be enrolled in a qualifying HDHP. An HDHP—often referred to as an HSA-compatible health plan—is a medical plan with annual deductibles and out-of-pocket limits that comply with IRS requirements under Internal Revenue Code § 223.

The plan’s deductible cannot be less than the minimum required deductible set by the IRS, and the plan’s out-of-pocket limit cannot be more than the maximum allowed out-of-pocket set by the IRS. The IRS adjusts the dollar amounts each year for inflation.

First, preventive care benefits can be paid with no deductible. Examples include annual physicals and screening tests, prenatal and well-child care, and immunizations. For a list of items currently designated as preventive care, see:

Note that IRS guidance includes a safe harbor allowing HDHPs to treat certain tests and drugs for chronic conditions as “preventive care” to waive the deductible. Examples include insulin and glucometers, statins, and blood pressure monitors. For details, see IRS Notice 2019-45. IRS Notices 2024-75 and 2024-71 expanded the safe harbor to include:

  • Non-prescription oral and emergency contraceptives;
  • Prescription and non-prescription male condoms purchased by any gender;
  • Additional types of breast cancer screenings (e.g., ultrasound, magnetic resonance imaging (MRI));
  • Continuous glucose monitors that use similar detection methods as a glucometer (i.e., piercing the skin), and those that also deliver insulin; and
  • Any device used to administer or deliver insulin products described in I.R.C. § 223(c)(2)(G).

Disqualifying Non-HDHP Coverage

Employees are not eligible to make HSA contributions (or receive HSA contributions from their employers) if they have any disqualifying non-HDHP coverage. An HDHP cannot pay benefits (except for preventive care and certain specific services) until the plan deductible is met, so any plan or coverage that pays or reimburses other medical expenses before the HDHP deductible is met will interfere with HSA eligibility.

Examples of disqualifying coverage include non-HDHP medical plans, general-purpose health flexible spending accounts (HFSAs), or health reimbursement arrangements (HRAs), whether covered as an employee, spouse, or dependent. Governmental programs, including Medicare, Medicaid, TRICARE, and Veterans Affairs (VA) benefits also are disqualifying non-HDHP coverage, if it provides more than just service-based coverage.