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Cost of living adjustments announced for several types of benefits plans

Understanding 2025 Updates for High Deductible Health Plans and HSAs

In a recent update from the IRS, significant changes were announced regarding high deductible health plans (HDHPs) and Health Savings Accounts (HSAs) for the year 2025. These updates affect the deductible amounts, out-of-pocket maximums, and contribution limits for individuals and families. It is crucial for benefits consultants, employers and employees to be aware of these adjustments to ensure compliance with the new regulations and to make informed decisions about their healthcare coverage.

Cost of Living Adjustments for High Deductible Health Plans

High deductible health plans are a type of health insurance plan that requires the insured to pay a higher deductible amount before the insurance company starts covering a portion of the healthcare costs. These plans often have lower monthly premiums compared to traditional health insurance plans, making them an attractive option for individuals and families looking to save on healthcare expenses.

For high deductible health plans renewing on or after January 1, 2025, specific deductible and out-of-pocket maximum parameters must be met. The new cost of living adjustments set by the IRS for the 2025 plan year are as follows:


  • $650 for individual coverage

  • $3,300 for family coverage

These amounts represent the lowest deductibles allowable for a plan to qualify as a high deductible health plan for the year 2025. It's important to note that these deductible amounts are the minimum requirements set by the IRS, and some health insurance plans may have higher deductibles.

Out-of-Pocket Maximums and HSA Contributions

In addition to the deductible adjustments, the maximum out-of-pocket limits have been set for 2025 as follows:

Out-of-Pocket Maximum:

  • $8,300 for individuals

  • $16,600 for families

The out-of-pocket maximum is the highest amount an insured individual or family will have to pay for covered healthcare expenses in a given year, including deductibles, copayments, and coinsurance. Once this limit is reached, the insurance company will cover 100% of the remaining covered expenses for the rest of the plan year.

Moreover, individuals looking to contribute to an HSA in the 2025 tax year should note the following limits:

HSA Contributions:

  • Individual Coverage: Up to $4,300

  • Family Coverage: Up to $8,550

  • Catch-up Contributions (age 55 or older): $1,000

Health Savings Accounts (HSAs) are tax-advantaged savings accounts that allow individuals enrolled in high deductible health plans to set aside money for qualified medical expenses. The funds contributed to an HSA are tax-deductible, and the money can be withdrawn tax-free when used for eligible healthcare expenses.

Eligibility and Disqualifying Coverage

As discussed in our other blogs (like this one), remember that certain types of coverage may disqualify individuals from contributing to an HSA. To be eligible for HSA contributions, individuals must:

  • Be enrolled in a high deductible health plan that meets the specified parameters

  • Not be enrolled in any disqualifying coverage, such as copay plans, Health FSAs, Medicare, or TriCare

First-dollar coverage plans are considered disqualifying and can impact an individual's eligibility to contribute to an HSA. First-dollar coverage plans are health insurance plans that cover a portion of healthcare expenses from the first dollar spent, without requiring the insured to meet a deductible first.

Compliance and Considerations

Employers and employees should carefully review their health plan options to ensure compliance with the updated regulations for 2025. Understanding the deductible limits, out-of-pocket maximums, and contribution caps is essential to maximize the benefits of high deductible health plans and HSAs.

When choosing a high deductible health plan, individuals should consider the following factors:

  • Expected healthcare expenses for the upcoming year

  • Ability to cover the deductible amount in case of a medical emergency

  • Potential tax savings from contributing to an HSA

  • Availability of employer contributions to an HSA

The rules and regulations surrounding HDHPs and HSAs can be complex - it's one of the topics that BCS helps agencies with on a regular basis. For more information on how we help benefits agencies stand out through excellence in the realm of compliance, visit for a free consultation.

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