Annual HSA Contribution Limits

These are the IRS-approved annual maximum contribution amounts that are allowed for an HSA account. This limit applies to the combined total of both employee and employer contributions.

The IRS publishes an annual HSA contribution maximum each year.  Although the amounts the IRS publishes are annual amounts, the amount an employee can contribute to the HSA tax-free is based on a pro-rated, per-month calculation.  An employee is eligible for 1/12th of the annual maximum contribution for every month during the calendar year in which they were covered by medical insurance.

If you had medical benefits for all 12 months, you are eligible for the full maximum HSA contribution. If you had benefits for 6 months, you are eligible to contribute half the annual limit. If an employee's HSA contributions for a year exceed the pro-rated amount for which they were eligible to contribute to an HSA, they will be responsible for paying taxes on the excess HSA contribution amount as well as a 6% penalty.  

Contributions, earnings, and distributions (when used to pay for qualified health expenses) are 100% exempt from federal income tax and FICA tax.