If you’re enrolled in a High-Deductible Health Plan (HDHP), opening a Health Savings Account (HSA) is one of the smartest financial moves you can make. HSAs offer unmatched triple tax advantages and flexibility, but how do you actually contribute to one?
Whether you're an employee, self-employed, or a small business owner, this guide will walk you through your options.
1. Make Sure You’re Eligible
Before you can contribute to an HSA, you need to meet the IRS’s eligibility rules:
- You must be enrolled in a HSA-qualified health insurance plan
- You cannot have other disqualifying health coverage (like a traditional health plan or general-purpose FSA)
- You cannot be enrolled in Medicare
- You cannot be claimed as a dependent on someone else’s tax return
Once you’re eligible, you can open an HSA with any qualified bank, credit union, or HSA provider.
2. Contribute Through Payroll (If Offered by Your Employer)
If your employer offers HSA contributions through payroll deduction, this is typically the easiest and most tax-efficient option. Why it’s great:
- Contributions can be made pre-tax, reducing your income for federal (and often state) taxes
- You and your employer can both contribute
- Funds are deposited automatically—no extra steps needed
Your employer saves on payroll taxes when you contribute via payroll, so it’s a win-win.
3. Make Direct Contributions Yourself
If you're self-employed, your employer doesn’t offer payroll deductions, or you want to contribute outside of payroll, you can contribute directly from your bank account.
- Contributions are tax-deductible when you file your taxes
- You’ll track your contributions manually
- Most HSA providers offer online portals for easy transfers
Keep good records for tax time. Your HSA provider will issue an IRS Form 5498 showing how much you contributed.
4. Accept Employer Contributions (Even If You Don’t Contribute)
Your employer can contribute to your HSA even if you don’t. These contributions:
- Count toward your annual contribution limit
- Are not taxable income
- Belong to you immediately (they’re not “use it or lose it”)
Always verify how much your employer is contributing so you don’t accidentally exceed the IRS limit.
5. Know the Current Year’s Annual Contribution Limits
For the 2025 tax year, the annual HSA contribution limits are:
- $4,400 for individuals
- $8,750 for families
- An additional $1,000 catch-up contribution if you're 55 or older
These limits include all contributions to your HSA: yours, your employer’s, and anyone else’s.
6. Use Your HSA Like a Long-Term Asset
You can contribute up to the limit every year even if you don’t plan to spend the money now. Many people use HSAs as a retirement health fund, investing unused contributions for future tax-free medical spending.
If you can afford to pay for current medical expenses out-of-pocket, you can let your HSA balance grow for years—tax-free.
LegUp Health Can Help
Choosing the right HSA-compatible plan and understanding your contribution options can get complicated. At LegUp Health, we help small business owners and employees navigate the process—from plan selection to setup and strategy.
👉 Want help picking the right HSA-compatible health plan? Schedule a free consultation today.
