Research · 7 min read
Who Is Eligible to Contribute to a Health Savings Account
Eligibility is tested month by month, on the first day of each month, and one disqualifying piece of other coverage ends it. The statute also names the coverage that does not count against you.
Key takeaways
- Eligibility is tested on the first day of each month: high deductible plan coverage, and no other health plan covering a benefit the high deductible plan covers.
- Entitlement to Medicare sets the monthly limitation to zero from the first month of entitlement onward, and no deduction is allowed to someone another taxpayer may claim as a dependent.
- The statute names the coverage that is disregarded, including permitted insurance, dental, vision, long-term care, telehealth and remote care, VA service-connected care, and qualifying direct primary care arrangements.
- The dollar figures printed in the statute are base amounts indexed under a cost-of-living provision, published by the Secretary no later than June 1 of the preceding year and rounded to the nearest $50.
- If either spouse has family coverage, both are treated as having that coverage, and the limit is divided equally unless they agree otherwise.
- The last-month rule allows a full-year contribution for someone eligible in December, but a testing period runs twelve further months and failing it triggers income inclusion plus a ten percent additional tax.
Answer first: two conditions, tested on the first day of each month
The statute defines an eligible individual, "with respect to any month," as any individual if two things are true. The individual "is covered under a high deductible health plan as of the 1st day of such month," and the individual "is not, while covered under a high deductible health plan, covered under any health plan" that both is not a high deductible health plan and "provides coverage for any benefit which is covered under the high deductible health plan."
The monthly framing matters more than it looks. The deduction limit is the sum of the monthly limitations for the months during the taxable year that the individual is an eligible individual, and each monthly limitation is one-twelfth of the applicable annual figure. Eligibility is not an annual status; it is twelve separate determinations.
The second condition is the one people trip over. It is not a rule against having two plans. It is a rule against having other coverage that duplicates a benefit the high deductible plan covers. That is why the statute then spends several paragraphs listing coverage that is disregarded.
Two categorical disqualifications sit outside that structure. No deduction is allowed to any individual with respect to whom another taxpayer may claim a dependency deduction for a taxable year beginning in the same calendar year. And for Medicare, the statute is blunt: the limitation "shall be zero for the first month such individual is entitled to benefits under title XVIII of the Social Security Act and for each month thereafter."
What coverage is disregarded
The statute lists three categories that the other-coverage test is applied without regard to. The first is "coverage for any benefit provided by permitted insurance." Permitted insurance is separately defined as insurance where substantially all of the coverage relates to workers' compensation liabilities, tort liabilities, liabilities relating to ownership or use of property, or similar liabilities the Secretary may specify — plus insurance for a specified disease or illness, and insurance paying a fixed amount per day or other period of hospitalization.
The second is coverage, whether through insurance or otherwise, "for accidents, disability, dental care, vision care, long-term care, or telehealth and other remote care."
The third is narrow and technical: coverage under a health flexible spending arrangement during a grace period immediately following the end of that arrangement's plan year, but only if the balance in the arrangement at the end of the plan year is zero, or the individual is making a qualified HSA distribution equal to the remaining balance as of the end of that plan year.
Three further special rules protect specific situations. An individual does not fail to be an eligible individual merely because they receive hospital care or medical services under a law administered by the Secretary of Veterans Affairs for a service-connected disability. Nor merely because they receive benefits for medical care under the federal surprise billing provisions or a comparable state law.
And a direct primary care service arrangement "shall not be treated as a health plan" for purposes of the other-coverage test. The statute defines that term as an arrangement providing medical care consisting solely of primary care services from primary care practitioners for a fixed periodic fee, subject to a monthly fee limitation of $150 per individual — twice that for an arrangement covering more than one individual — and it excludes from "primary care services" any procedure requiring general anesthesia, prescription drugs other than vaccines, and laboratory services not typically administered in an ambulatory primary care setting.
What makes a plan a high deductible health plan
The statute defines a high deductible health plan by two numbers. It must have an annual deductible of not less than a stated amount for self-only coverage and twice that for family coverage, and the sum of the annual deductible and other annual out-of-pocket expenses required to be paid under the plan, other than premiums, must not exceed a stated maximum for self-only coverage and twice that for family coverage.
The figures printed in the statute are base amounts, not current ones. The cost-of-living provision increases each dollar amount in the definition by an adjustment computed from calendar year 2003 for the plan thresholds, rounded to the nearest multiple of $50, with the Secretary required to publish the adjusted amounts no later than June 1 of the preceding calendar year. For 2025, Publication 969 states a minimum deductible of $1,650 for self-only and $3,300 for family coverage, with maximum out-of-pocket amounts of $8,300 and $16,600.
Several safe harbors let a plan keep its status despite gaps in the deductible. A plan does not fail to be a high deductible health plan by reason of failing to have a deductible for preventive care, for telehealth and other remote care services, or for selected insulin products — a term the statute defines to reach any dosage form of any different type of insulin licensed and marketed under the cited Public Health Service Act provisions. Nor does it fail by providing benefits under the surprise billing rules before the deductible is satisfied.
Network plans get two accommodations. A plan does not lose its status by having an out-of-pocket limitation for out-of-network services that exceeds the applicable limit, and its annual deductible for out-of-network services is not taken into account for purposes of the contribution limitation.
One exclusion runs the other way: a plan is not a high deductible health plan "if substantially all of its coverage" is the disregarded coverage described above.
How much may be contributed, and the marriage and age rules
The deduction is limited to the sum of the monthly limitations for the eligible months, with each monthly limitation being one-twelfth of the applicable self-only or family amount for someone with that coverage as of the first day of the month. Those two amounts are base figures in the statute, indexed under the cost-of-living provision from calendar year 1997 and rounded to the nearest $50. For 2025, Publication 969 states $4,300 for self-only coverage and $8,550 for family coverage.
An individual who has attained age 55 before the close of the taxable year gets an increase called the additional contribution amount. The statute sets it out as a table running from $500 for 2004 up to "2009 and thereafter — $1,000." Publication 969 states the same $1,000 figure.
Marriage changes the arithmetic in a way that surprises people. If either spouse has family coverage, "both spouses shall be treated as having only such family coverage," and if each has family coverage under different plans, as having the family coverage with the lowest annual deductible. The resulting limitation — computed before any age-55 additional amount — is then reduced by amounts paid to the spouses' Archer MSAs and divided equally between them "unless they agree on a different division."
The limitation is also reduced by other routes into the same account. It is reduced by amounts paid for the year to the individual's Archer MSAs, by employer contributions to the individual's health savings accounts that are excludable from gross income, and by amounts contributed under the qualified HSA funding distribution provision — with the statute specifying that those amounts are not separately deductible.
The last-month rule, and the testing period attached to it
There is a provision that lets someone who becomes eligible partway through a year contribute as though they had been eligible all year. An individual who is an eligible individual during the last month of the taxable year "shall be treated as having been an eligible individual during each of the months in such taxable year," and as having been enrolled during those months in the same high deductible health plan they were enrolled in for that last month. Publication 969 describes the same rule and names December 1 as the last month for most taxpayers.
The catch is a look-forward requirement. If at any time during the testing period the individual is not an eligible individual, two things happen. The individual's gross income for the taxable year containing the first non-eligible month in the testing period "is increased by the aggregate amount of all contributions" that could not have been made but for the last-month rule. And the tax for that year is increased by "10 percent of the amount of such increase."
The testing period is defined precisely: it begins with the last month of the taxable year in question and ends on the last day of the twelfth month following that month. Publication 969 states it the same way.
There are two exceptions. The income inclusion and the additional ten percent do not apply if the individual ceased to be an eligible individual by reason of death, or by becoming disabled within the meaning of the statute's cross-reference.
None of this determines any individual's eligibility or limit. The statute states the conditions and the indexing method; the published annual figures come from the Secretary; and whether a particular plan meets the high deductible health plan definition in a particular year is a fact about that plan's terms.
Sources
- 26 U.S.C. § 223 — Health savings accountsThe definition of an eligible individual and its first-day-of-the-month test; the other-coverage condition; the disregarded coverage categories including permitted insurance, the enumerated benefit types and the health flexible spending arrangement grace period conditions; the veterans and surprise billing special rules; the direct primary care service arrangement provision with its $150 monthly fee limitation and its excluded services; the high deductible health plan definition, its base deductible and out-of-pocket figures, the exclusion for plans substantially all of whose coverage is disregarded coverage, and the safe harbors for preventive care, telehealth, selected insulin products, surprise billing and network plans; the monthly limitation structure and the base self-only and family amounts; the age-55 additional contribution amount table; the coordination reductions for Archer MSAs, excludable employer contributions and qualified HSA funding distributions; the special rule for married individuals; the denial of a deduction to dependents; the Medicare zero-limitation rule; the last-month rule, the testing period definition, the income inclusion and ten percent additional tax and the death and disability exceptions; and the cost-of-living adjustment provision with its base years, $50 rounding and June 1 publication deadline.
- Publication 969 (2025), Health Savings Accounts and Other Tax-Favored Health PlansThe 2025 contribution limits of $4,300 for self-only and $8,550 for family coverage; the additional $1,000 for those age 55 or older; the 2025 high deductible health plan minimum deductibles of $1,650 and $3,300 and maximum out-of-pocket amounts of $8,300 and $16,600; the statement that the contribution limit is zero beginning with the first month of Medicare enrollment; and the publication's statements of the last-month rule and the testing period.
Frequently asked questions
What makes someone an eligible individual?
For any month, being covered under a high deductible health plan as of the first day of that month and not being covered, while so covered, under any health plan that is not a high deductible health plan and that provides coverage for a benefit covered under the high deductible plan. Eligibility is determined month by month, and the annual limit is the sum of the monthly limitations for eligible months.
Does Medicare end eligibility?
The statute provides that the limitation for any month is zero for the first month the individual is entitled to benefits under title XVIII of the Social Security Act and for each month thereafter. Publication 969 states the same rule as "beginning with the first month you are enrolled in Medicare, your contribution limit is zero."
What other coverage is allowed alongside a high deductible plan?
The statute disregards permitted insurance — including workers' compensation, tort and property liability coverage, specified disease or illness insurance, and fixed hospitalization indemnity insurance — and coverage for accidents, disability, dental care, vision care, long-term care, and telehealth and other remote care. It also protects VA care for a service-connected disability, benefits provided under the surprise billing rules, and, subject to a monthly fee limitation, direct primary care service arrangements.
How much can be contributed?
The deduction limit is the sum of monthly limitations, each one-twelfth of the applicable self-only or family amount, plus an additional contribution amount of $1,000 for someone who has attained age 55 before the close of the taxable year. The self-only and family figures in the statute are base amounts indexed under the cost-of-living provision. Publication 969's 2025 edition states $4,300 for self-only and $8,550 for family coverage.
What happens if spouses have different coverage?
If either spouse has family coverage, both are treated as having only that family coverage, and where each has family coverage under a different plan, as having the family coverage with the lowest annual deductible. The resulting limit is reduced by amounts paid to their Archer MSAs and then divided equally between them unless they agree on a different division.
What is the last-month rule, and what is the risk?
Someone who is an eligible individual during the last month of the taxable year is treated as having been eligible during every month of that year. If at any time during the testing period — from that last month through the last day of the twelfth month following it — the individual is not an eligible individual, gross income is increased by the contributions that could not otherwise have been made, and the tax is increased by ten percent of that amount. Death and becoming disabled are the two stated exceptions.