What's the "right" way to contribute to an HSA?

When I took the plunge into full-time freelancing, one of the first things I did was look at my health insurance options. I had just quit my full-time editorial day job with benefits for a one-year contract creating content for a major insurance company.

I'm generally someone who's mostly "risk-averse" and veers toward the unknown. So was becoming an independent contractor scary? You bet. Fortunately, being the hardcore, prudent money nerd that I am, I did my homework on health care insurance. After poring over policies I ultimately decided that an HMO with a high deductible was the option for me. Shortly thereafter, I opened an HSA.

What works best for me might not be the case for you. If you're on a high deductible health plan (HDHP) and opened an HSA, here's how to determine how much you should contribute: How much you earn doesn't affect how much you can contribute to your HSA in a given year. They're the same whether you earn $40,000 annually or $140,000. That said, how much you earn affects how much you can reasonably tuck away.

The HSA contribution limits for 2025 are $4,300 for those participating in the health plan as individuals, and $8,550 for those participating as families. If you're single like me, you'll need to contribute about $358 each month, or $83 a week to max out on your contribution limits. If you have a family, you'll need to squirrel away about $712 a month, or $164 a week.

Of course, it depends on your expenses and debt load. But if you have a higher income and/or lower expenses, you most likely can save more.

Budget accordingly

Income is one thing, but budgeting for your HSA contributions is another. I include my HSA contributions as part of my spending plan, and make auto-contributions every week. If you just opened an HSA fund, consider auto-saving each week or monthly, or aim to save a percentage of your income.

Let's say you're a self-employed freelancer. After you've covered your living expenses, aim to save 10% of "extra" money until you've hit the annual maximum contribution. You can also consider gradually bumping up your contributions throughout the year. For instance, if you're a freelancer and your income gradually increases, save $50 in January, $100 month in February, and so forth.

On the flip side, think about how having an HSA helps with your budget. As you'll be enjoying triple-tax benefits, it's worthwhile to stay up to date on eligible expenses. You'll also want to plan for the year ahead on how and when you'll be tapping in to your HSA funds. To help you budget, look at your medical costs in the years' prior, and the deductibles and copayments.

Understand your own risk tolerance

If you or a member of your household had to go to the ER, how would that set you back financially? Or worse, developed a condition that required ongoing medical treatment? If an unexpected medical expense could put you in the poorhouse, consider contributing as much as possible to your HSA.

And in all cases, if you're unsure, speak with a professional tax or financial advisor to help you make the best decision when it comes to your HSA.

Remember: Unlike an FSA, the funds in an HSA don't need to be used by the end of year. The money stays in your account for as long as it remains open.

Do you have dependents?

If you have a family, you'll also want to factor in their health care needs. When will they be going to the doctor for routine care? Do any of them have a medical condition that requires visits to a specialist, and prescription medication? Prioritizing everyone's health needs might feel like you're constantly spinning plates.

Invest or use it now?

I personally use funds in my HSA as an investment vehicle. That's because I have some money set aside in my emergency fund for out-of-pocket medical costs. If you decide to invest your HSA funds, you'll want to make sure you have enough stashed away to cover your deductible, copays, and in the case of a medical emergency.

Figuring out how much you can reasonably contribute to your HSA fund is different for every family and situation. It requires a dash of research, planning and some trial and error.

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