The Internal Revenue Service issued inflation adjustments for 2025 for health savings accounts in connection with high-deductible health plans in Revenue Procedure 2024-25.
HSAs are accounts that can be funded with pre-tax contributions. The funds, which can be invested, then grow tax-free and can be distributed tax-free, provided they are spent on qualified medical expenses. HSAs are therefore said to be triple-tax privileged. In order to use an HSA, an employee must be enrolled in a high-deductible health plan.
For 2025, high-deductible means “a health plan with an annual deductible that is not less than $1,650 for self-only coverage or $3,300 for family coverage.” This is an increase from $1,600 for self-only coverage and $3,200 for family coverage. A HDHP also must maintain a maximum out-of-pocket limit of $8,300 for self-only and $16,600 for family for 2025; an increase from $8,050 and $16,100, respectively.
The maximum HSA contributions also increased for 2025. For self-only coverage, an individual can contribute up to $4,300 annually or $8,550 for family coverage. The limits for 2024 had been $4,150 and $8,300, respectively.
Account holders 55 and older can contribute an additional $1,000 to either category.
Plan sponsors and participants both benefit from retirement plans implementing the Saver’s Match because adding it could reduce gender and race disparities in 401(k) balances, finds research from the Collaborative for Equitable Retirement Savings.
“A lot of the disparities we had seen without the Saver’s Match, I think, start to get reduced and mitigated as a result of [the match] going forward,” explains Jack VanDerhei, director of retirement studies at Morningstar, regarding the research which represents phase two of the collaborative’s research partnership.
The collaborative is a research partnership of Morningstar, DCIIA and the Aspen Institute Financial Security Program. The purpose of this latest research project was to simulate the likely impact of the Saver’s Match on the participants that the collaborative is studying, in order to “gain insight into the ability of the new program to enhance retirement outcomes under several different assumptions,” the report states.
Outlined in the SECURE 2.0 Act of 2022 to be introduced for the 2027 tax year, the Saver’s Match is a 50% federal matching contribution deposited directly into a taxpayer’s IRA or retirement plan up to a maximum contribution of $2,000 (or $4,000 if married filing jointly).
In this project, the collaborative’s researchers simulated the effects of different scenarios on an individual’s retirement savings, studying two types of assumptions. First, where participants get the Saver’s Match, but do not change their contributions. And second, where every participant who was contributing below $2,000 increased their deferrals to that threshold, says VanDerhei.
The latest research simulated retirement savings outcomes for eight different race/gender categories organized by age, eligibility and behavioral assumptions if they utilized the Saver’s Match. It found, among other outcomes, that the youngest plan participants, who would have more time to benefit from the match, would have the most positive results from the match.
For Saver’s Match-eligible workers, the increase in a participant’s account balance at retirement at age 65 could be as much as 21.4% to 33.7%, depending on filing status and eligibility as well as behavioral assumptions, the research shows.
“One of the things I wanted to take a look at right away was—when the Saver’s Match kicks in—given the disparities in income and the disparities in whether or not [participants have] actually already contributed the full $2,000: Is there going to likely be a situation where a lot of the disparities I showed in the first publication are mitigated because of that Saver’s Match?” VanDerhei says.
Implementing the Saver’s Match should benefit specific cohorts of a plan sponsor’s population.
For Black women, who are currently age 25 to 34 and who will be eligible for the Saver’s Match in 2027, moving their individual contributions to $2,000 “increases their average account [balance] by more than [one]-quarter, all the way to 27.4%,” he says.
The simulation in the research also found Black women would have the largest benefit from the match, with an overall increase—across ages—of 21.4% to their defined contribution account balances, the research finds.
In addition to the benefits to individual account balances, the researchers concluded that the Saver’s Match could benefit larger plans as these may be able to use their growth in assets under management to negotiate lower fees, which would benefit every participant in that plan.
“One thing a plan sponsor could do if they really wanted to incentivize [participants saving more for retirement] apart from just education…start [by] giving additional employer matches on that first [$2,000 of contributions] to get them up to that particular level or maybe even a nonelective contribution to put in additional money for the employees to increase their contribution,” explains VanDerhei.
The dataset used for the collaborative’s analysis consists of 2022 data from nine 401(k) plan sponsors. The total dataset includes 180,684 active plan participants under age 65 with a positive account balance.
