Part 4: Are You Really Eligible for an HSA in 2025? The HDHP Rules Everyone Gets Wrong

Are You Really Eligible for an HSA in 2025? The HDHP Rules Everyone Gets Wrong

A lot of taxpayers assume that “having a high deductible” automatically makes them eligible for a Health Savings Account (HSA).
In reality, the IRS has very specific rules about what counts as a true High Deductible Health Plan (HDHP), what other coverage is allowed, and how FSAs or HRAs can quietly disqualify you — even if your insurance card says “HSA-compatible.”

1️⃣ Who Counts as an “Eligible Individual” for HSA Purposes?

To contribute to an HSA, you must be an eligible individual for every month you make contributions.
Based on IRS rules and current guidance, you generally qualify if all of the following are true for that month:

• You are covered under a HSA-qualified HDHP on the first day of the month.
• You have no other disqualifying health coverage (beyond certain permitted types described below).
• You are not enrolled in Medicare (any part).
• You cannot be claimed as a dependent on someone else’s tax return.

At a high level, HSA eligibility starts with HDHP coverage and then subtracts any other coverage that pays for your regular medical expenses before you meet the HDHP deductible.

2️⃣ 2025 HDHP Requirements — Deductible & Out-of-Pocket Limits

For 2025, the IRS defines an HSA-qualified High Deductible Health Plan (HDHP) as a plan that meets both:

• Minimum annual deductible
  • Self-only coverage: at least $1,650
  • Family coverage: at least $3,300
• Maximum out-of-pocket limit (in-network deductibles, copays, and coinsurance; not premiums)
  • Self-only coverage: no more than $8,300
  • Family coverage: no more than $16,600

If your plan’s deductible is lower than these minimums, or its in-network out-of-pocket limit is higher than these maximums, it is not an HSA-qualified HDHP for 2025 — even if it is marketed as “high deductible.”

3️⃣ The Family Plan “Embedded Deductible” Trap

Family HDHPs often have both:

• a family deductible (applies to the whole family), and
• an embedded individual deductible for each covered person.

Under IRS guidance, a family plan does not qualify as an HDHP if either:

• the family deductible, or
• the individual embedded deductible for any family member

is less than the minimum annual deductible for family HDHP coverage ($3,300 in 2025).

This “hidden” rule is one of the most common reasons a plan that looks like an HDHP on paper actually fails HSA eligibility.

4️⃣ Which Other Coverage Is Allowed — and Which Isn’t?

In general, if you have HDHP coverage, you cannot also have other health coverage that pays for your regular medical expenses before you meet the HDHP deductible. However, certain types of coverage are explicitly allowed and will not disqualify you.

Permitted additional coverage can include policies that pay only for:

• Workers’ compensation, tort, or property-related liabilities
• A specific disease or illness
• A fixed amount per day (or other period) of hospitalization

And separate coverage (insurance or otherwise) for:

• Accidents
• Disability
• Dental care
• Vision care
• Long-term care
• Certain telehealth and other remote care services

These “excepted benefits” can coexist with your HDHP without costing you HSA eligibility, as long as they don’t operate like ordinary health coverage that pays general medical expenses before the HDHP deductible.

5️⃣ Prescription Drug Plans, FSAs, and HRAs

Prescription drug coverage and tax-favored employer plans create some of the most frequent HSA eligibility mistakes.

💊 Prescription Drug Plans

You can still be HSA-eligible if your prescription benefit:

• is part of your HDHP or a separate plan, and
• does not pay benefits until you have met the HDHP’s minimum annual deductible.

But if your prescription plan pays for medications before you reach the HDHP minimum deductible, you are not an eligible individual for HSA contributions.

🏦 FSAs and HRAs

If you are covered by an HDHP and also have a traditional, general-purpose:

• Health FSA, or
• HRA

that reimburses regular medical expenses before you meet the HDHP deductible, you generally cannot contribute to an HSA.

However, you can still contribute to an HSA while covered by an HDHP plus one or more of the following arrangements:

• Limited-purpose FSA or HRA – only pays or reimburses dental, vision, and other permitted excepted benefits (and possibly preventive care).
• Suspended HRA – you elect to suspend HRA benefits for the year (other than preventive and limited excepted coverage).
• Post-deductible FSA or HRA – does not reimburse any medical expenses until after you have met the HDHP minimum deductible.
• Retirement HRA – reimburses only medical expenses incurred after retirement (no HSA contributions allowed once you retire).

These structures are specifically designed to coordinate with HSAs without destroying eligibility.

6️⃣ Quick Eligibility Checklist for 2025

For each month in 2025, ask yourself the following:

💬 Frequently Asked Questions