Guidelines for HSA Contribution Limits

Health Savings Accounts (HSAs) are one of the most useful benefits available to employees, but the rules around them change regularly and can be surprisingly easy to misunderstand.

Each year, the IRS can update HSA contribution limits, eligibility rules, and plan requirements. For business owners and HR managers already juggling payroll, benefits, and compliance, keeping up with these changes can feel like just one more thing to worry about. And for employees, contributing too much can lead to tax penalties they weren’t expecting.

In this article, we will walk through the 2026 HSA contribution limits, compare them to 2025, explain who is eligible to contribute, and answer some of the most common questions we hear about HSAs. We will also cover how the One Big Beautiful Bill Act impacts HSAs. Let's go.

Key Takeaways from this Article

• HSA contribution limits increase slightly in 2026 to $4,400 for self-only coverage and $8,750 for family coverage, and employer and employee contributions still count toward the same cap.

• Eligibility to contribute to an HSA depends on being enrolled in a qualifying high-deductible health plan and avoiding disqualifying coverage.

• The One Big Beautiful Bill Act expands HSA access by permanently allowing certain telehealth services and recognizing additional plan types.

• Overcontributing to an HSA can result in IRS penalties, but most errors can be corrected if caught early.

• Contribution deadlines extend beyond the calendar year, which gives employers and employees flexibility at year-end.

What is a Health Savings Account (HSA)?

An HSA, or Health Savings Account, is a special savings account you can use to pay for qualified medical expenses now and/or in the future. It’s only available to people who are enrolled in an HSA-eligible high deductible health plan (HDHP).

An HSA helps employees set aside money specifically for healthcare costs. But what makes it different from a regular savings account is how it’s taxed. Money that goes into an HSA is considered pre-tax. That means:

• Contributions reduce your taxable income (if made through payroll or claimed on your tax return).
• The money in the account can grow over time without being taxed.
• Withdrawals are tax-free as long as they’re used for qualified medical expenses.

Another key feature of an HSA is that the account belongs to you, not your employer. If you change jobs, switch health plans, or even retire, the HSA goes with you. Any unused funds roll over from year to year, so there’s no pressure to use it all in one year.

HSAs can be used to pay for a wide range of expenses, including deductibles, copays, prescriptions, dental care, vision care, hearing aids, and many other out-of-pocket medical costs. Later in life, HSA funds can also be used for certain Medicare premiums and other healthcare expenses in retirement.

A Summary of HSA Contribution Limits

Once an employee is eligible to contribute to an HSA, contributions can be made by the employee, the employer, or both.  All contributions made to an HSA are subject to annual IRS limits.

For 2026, the IRS increased HSA contribution limits slightly to account for rising health care costs. These limits apply to the total amount contributed, regardless of where the money comes from.

It’s important to stress that these limits are annual limits and not per paycheck and not per contributor. They are annual limits set by the IRS, and exceeding them can trigger penalties.

Who is Eligible to Contribute to an HSA?

Not everyone with an HSA account is automatically eligible to contribute. Eligibility is determined month by month and depends on the individual’s health coverage and tax status.

Generally, an individual can contribute to an HSA if all of the following are true:

• They are enrolled in an HSA-eligible high-deductible health plan.
• They are not enrolled in Medicare.
• They are not covered by other disqualifying health coverage, such as a general-purpose health care FSA.
• They cannot be claimed as a dependent on someone else’s tax return.

This is where mistakes often happen. We regularly see payroll deductions set up correctly, only to find out later that an employee wasn’t actually eligible for part of the year. When that happens, corrections are required, and sometimes penalties apply.

The One Big Beautiful Bill Act Changes to HSA

Recent legislation has expanded access to HSAs and clarified how certain health arrangements interact with HSA eligibility. The One Big Beautiful Bill Act (OBBBA), signed into law in July 2025, made several changes that employers and employees should understand about HSAs in 2026.

Permanent Telehealth Safe Harbor

Under prior temporary rules, some HDHPs were allowed to cover telehealth services before the deductible without disqualifying HSA eligibility. The OBBBA makes this allowance permanent, effective retroactively for plan years beginning after December 31, 2024.

This means HDHPs can continue offering certain telehealth and remote care services without a deductible while still remaining HSA-compatible. For employees, this provides more flexibility in accessing care. For employers, it removes uncertainty around plan design.

Bronze and Catastrophic Plans Treated as HDHPs

Starting in 2026, certain bronze-level and catastrophic health plans offered through the individual health insurance marketplace may be treated as HDHPs for HSA purposes, even if they don’t meet the traditional deductible or out-of-pocket requirements.

This is a meaningful change. Before the OBBBA, many bronze and catastrophic plans disqualified individuals from contributing to an HSA. Under the new rules, more people may qualify, particularly those purchasing coverage individually.

Direct Primary Care Arrangements

The OBBBA also clarified how direct primary care service arrangements interact with HSAs. Beginning in 2026:

• Enrolling in a qualifying arrangement will not disqualify an individual from contributing to an HSA.
• HSA funds may be used to reimburse certain direct primary care fees.
• Monthly fees must stay below IRS-set limits to preserve eligibility.

This change expands HSA compatibility for individuals who value primary care models with predictable, subscription-style pricing.

What Were the HSA Limits in 2025?

The 2025 HSA contribution limits are still relevant for employees making late contributions or correcting payroll errors:

• Self-only coverage: $4,300
• Family coverage: $8,550
• Catch-up (age 55+): $1,000

Employees generally have until the tax filing deadline to make or adjust contributions for the prior year. That means 2025 limits may still apply well into 2026.

FAQs on HSA Contribution Limits

What is the difference between an HSA and an FSA?

An HSA and a health care FSA are both ways to pay for medical expenses with pre-tax dollars, but they work very differently. An HSA is owned by the individual, not the employer, and the money stays with you even if you change jobs or retire. Any unused funds roll over from year to year, and balances can even be invested for long-term growth.

A health care FSA, on the other hand, is typically employer-owned. While it allows employees to set aside pre-tax money for medical expenses, most FSAs are subject to “use it or lose it” rules, meaning unused funds may be forfeited at the end of the plan year (with limited carryover exceptions).

What are the tax penalties associated with an HSA?

If more money is contributed to an HSA than the IRS allows, the excess amount is subject to a 6% excise tax for each year it remains in the account. This penalty continues annually until the excess is corrected.

The good news is that most overcontributions can be fixed. If the excess contribution and any earnings on that excess are removed before the tax filing deadline (including extensions), the penalty can usually be avoided. This is why it’s important to monitor both employee and employer contributions throughout the year, especially if contributions change mid-year or coverage status shifts.

Do employer contributions affect the HSA limit?

Yes, they do. Employer contributions are included in the annual HSA contribution limit and reduce how much an employee can contribute personally. The IRS does not separate employer from employee contributions when calculating the limit.

For example, if the 2026 self-only HSA contribution limit is $4,400 and an employer contributes $1,200 during the year, the employee may only contribute up to $3,200. Failing to account for employer contributions is one of the most common reasons people accidentally overfund their HSAs.

What are spousal catch-up contributions?

Once an individual turns age 55, the IRS allows an additional $1,000 catch-up contribution each year. If both spouses are age 55 or older, each spouse is eligible for their own $1,000 catch-up contribution, totaling $2,000 total.

However, catch-up contributions must be made into separate HSAs. They cannot be combined into a single account, even if the couple is covered under a family health plan. This distinction often surprises people and can lead to contribution errors if not handled carefully.

What is the HSA contribution deadline?

HSA contributions for a calendar year can generally be made up until the federal tax filing deadline, which is usually in mid-April of the following year. This means contributions for 2026 can typically be made until April 2027.

This extended deadline gives employees flexibility to review their income, employer contributions, and tax situation before finalizing their HSA funding. Many people use this window to “true up” contributions after year-end, once they know exactly how much was contributed through payroll and by their employer.

Conclusion

Health Savings Accounts can be a powerful tool for both employees and employers, but only when the rules are clearly understood and applied correctly. With updated contribution limits for 2026 and new flexibility introduced by the One Big Beautiful Bill Act, it’s more important than ever to stay informed about eligibility, contribution timing, and how different types of coverage interact with HSAs.

Written: February 2026

Written by: Danielle Nemeth