Tips for deciding how much to contribute to your FSA/HSA

Whether you get health coverage through your employer or through your state’s health benefit exchange, you have choices to make every year. During your enrollment period, you can pick a plan that’s right for you and your family — and you may be able to save money by setting up a flexible spending account (FSA) or health savings account (HSA).

What are FSAs and HSAs? FSAs and HSAs are a way to set dollars aside before taxes to help pay for your out-of-pocket medical costs. You can use this money for your share of expenses that aren’t covered by your health plan — like copays for doctor and dentist visits, prescriptions, and eyeglasses — as well as for over-the-counter drugs and many personal care products. Not all employers offer FSAs, and HSAs are only available with a high deductible health plan (HDHP).

How much should I contribute to my FSA/HSA?

The amount of money you contribute each year depends on many factors. These include your salary, how many dependents you have, and any known health issues within your family. Taking a few moments to estimate your possible out-of-pocket costs for the next year is the first step. Then, you can decide how much money you feel comfortable setting aside.

Estimate your health expenses for next year

Routine care and known health needs

Estimate how much money you and your family usually spend out of pocket on health expenses each year. Think of the care you’re likely to get, and how much it typically costs you after insurance. Answer these questions to help you do the math:

How many times do you visit a doctor? What is your copay/coinsurance? (Learn more about important health care terms, including copays and coinsurance.)
Do you take prescription medication?
Do you regularly take over-the-counter medications, like ibuprofen and antihistamines?
How many times do you get your teeth cleaned?
Do you wear eyeglasses or contact lenses?
Do you sometimes visit an acupuncturist, chiropractor, or mental health therapist?

Qualified expenses include doctor visits, physical exams, medication, mental health care, eye exams, dental care, and more

Other planned care

Are you planning any elective health procedures next year? If so, request an estimated cost from your care provider. (If you’re a Kaiser Permanente member, you can use our treatment cost calculator to estimate how much you would pay out of pocket on your current plan.) Here are some examples of expenses you can plan for:

Joint replacement surgery
Inpatient alcohol or drug addiction treatment
Dental braces
Vision corrective surgery

Unplanned care

Consider what you might have to pay for any unexpected health costs. Obviously, accidents and unforeseen health issues are hard to plan for. The simplest way to estimate this is by using your annual deductible and out-of-pocket maximum.

You reach your out-of-pocket maximum after meeting your deductible and by paying copays and coinsurance

Deductible — How much you’ll have to spend out of pocket for covered services before your plan starts to pay.
Out-of-pocket maximum — The most you’ll have to spend for most covered services in a year before your health plan covers 100% of your medical expenses. It includes your deductible and other costs your health plan doesn’t cover — your copays and coinsurance.

The federal government sets out-of-pocket maximum limits each year under the Affordable Care Act. If you have any questions about your plan’s limits, contact your employer or your health plan coverage documents. Keep in mind that your out-of-pocket maximum may be more than you’re allowed to contribute to your FSA/HSA — we’ll review contribution limits below.

As you move into the next step in planning, you now have a range of amounts to consider — from covering some of your known routine care needs, to setting aside the total amount you think you might spend out of pocket next year.

Determine your contribution amount

Know your limits

FSAs and HSAs have minimum and maximum amounts that you’re allowed to contribute. Your employer (for an FSA) or financial institution (for an HSA) decides their minimum contributions — for example, $100. The federal government decides HSA maximum amounts. The government also sets a maximum FSA contribution, but your employer can set a lower contribution limit for their employees.

Note: if both your and your spouse’s employers offer an FSA, you may each be able to set up an account and contribute to the maximum amount. Here are the maximum contribution amounts for 2024:

FSA maximum — $3,200 or lower, depending on employer
HSA maximum, individual — $4,150
HSA maximum, family — $8,300

When you turn 55, you can make catch-up contributions to your HSA. You can contribute an additional $1,000 each year until you’re enrolled in Medicare. To learn more about contributions, see IRS Publication 969 or talk with your tax advisor. If you have any questions about your plan’s limits, contact your employer or financial institution.

Find your comfort zone

If this is the first time you’re contributing to an FSA/HSA and you aren’t sure how much you wish to contribute, here are a few ways to approach it:

Start with the basics. You’ve accounted for your known routine health needs, so now add up just the basics per person in your household. For example, for each family member you might calculate your out-of-pocket costs for one doctor visit, a year’s worth of prescriptions, new eyeglass lenses, and 2 dental cleanings. If your employer also contributes to your FSA or HSA, try to at least match their contribution. If that amount feels too high, remember that you can contribute your plan’s minimum amount.

Aim for the carryover amount. While not all FSAs allow you to roll funds over to the next year, many have added this feature because of the COVID-19 pandemic. If your FSA allows this and you contribute only that amount, you can have the comfort of knowing that any funds you don’t use will carry over to the next year. If you have an HSA, you don’t have to worry about carryover, because the money you contribute is yours and will stay in your account until you use it.

Set aside the amount of your deductible. Help protect your household budget by using your FSA/HSA to cover the amount you have to pay for care before your health plan starts to pay.

Estimate all your yearly planned out-of-pocket care, from cough syrup to LASIK. You can set aside as much as you plan to spend on qualified health expenses next year, as long as it’s within your FSA or HSA maximum contribution limit.

If you’re still unsure about how much money to contribute, try setting a health care budget . Your budget can also include how much you expect to spend each month on your health plan.

Track your out-of-pocket expenses throughout the year

As the year unfolds, keep track of your major out-of-pocket health expenses. Being mindful of how much you spent on your and your family’s health will help you plan your FSA/HSA contributions for the next year. Besides doctor visits, you can even keep tabs on all eligible health expenses —like sunscreen and tampons—not just doctor visits.

What if I don’t have enough money in the account?
Maybe you need to visit the doctor more than you expected to, or your dental bills are higher than you planned for. If you have an HSA, you can increase your contribution amount anytime during the year, up to the annual limit. If you have an FSA, you can use this information to plan next year’s contributions.

What if I have money left over?
Set a calendar reminder for late in the year, like October. If you have money left that you don’t expect to spend on health care, you can use it to buy eligible items with your plan’s debit card at an FSA store or HSA store. Stock up on eligible items you use all the time, like contact lens solution and bandages.

Remember, if you have an HSA account, you can choose to leave that money for your future health care costs. It may earn interest and, over time, reduce the amount you need to save.

No matter how much you set aside, starting an FSA or HSA is a smart way to pay for health expenses for you and your family.

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