New Update: Healthcare Costs Increasing by Over 60% in Some States. Will you be impacted?

Paychex Employees, Prepare for Enhanced HSA Benefits in 2025

Healthcare Provider Update: Healthcare Provider for Paychex Paychex partners with various healthcare providers to offer employee health insurance options, including plans through the Affordable Care Act (ACA) marketplace and group health insurance solutions. Their offerings typically feature comprehensive coverage options to align with the diverse needs of their employees. Potential Healthcare Cost Increases in 2026 In 2026, Paychex employees may face significant healthcare cost increases as ACA marketplace premiums are projected to rise sharply, with some insurers estimating hikes exceeding 60%. This surge results from a combination of expiring federal premium subsidies, escalating medical costs, and aggressive rate increases from major insurers. With projections indicating that over 22 million marketplace enrollees could experience average out-of-pocket premium increases of 75% or more, it's crucial for Paychex workers to strategize their healthcare choices to mitigate these potential financial pressures. Click here to learn more

For Paychex employees, maximizing contributions to your HSA in 2025 may be a smart way to control costs around healthcare and also grow your long-term savings for retirement, said.

With the increase in HSA contribution limits coming soon, Paychex employees approaching retirement should take advantage of this opportunity to grow their healthcare savings now so they can take a tax-efficient approach to future medical costs, said Sullivan.

In this article, we will discuss:

1. Limits on 2025 IRS health savings account (HSA) contributions.

2. How HSAs give you a triple tax advantage and help you control costs for healthcare.

3. HSAs & retirement planning & Medicare premiums.

The IRS has announced inflation-adjusted increases to the health savings account (HSA) contribution limits for 2025. The contribution cap for those with self-only health coverage will increase from USD 4,150 in 2024 to USD 4,300 in 2025, and for families, the maximum will increase from USD 8,300 to USD 8,550.

HSAs provide a triple tax benefit - contributions are deductible, account assets grow tax-free, and withdrawals for approved medical expenses are tax-free. Such features help HSAs manage healthcare costs.

Your high-deductible health plan must offer an HSA. For the year 2025, the IRS says the plans must carry a USD 1,650 individual deductible and USD 3,300 family deductible.Even with all these benefits, a 2023 survey by the Plan Sponsor Council of America found only 19% of HSA account holders invest—most keep their savings in cash—potentially missing big growth opportunities.

The IRS is also updating the catch-up contribution limit for Paychex employees over age 55 this year—keeping the USD 1,000 catch-up contribution for now.Understand HSAs and how they could benefit your financial strategy—especially with the rise of healthcare costs and retirement planning. Prompt financial decisions such as switching to a Roth IRA or drafting a will are life planning steps as well.

And for Paychex employees approaching retirement age: HSA money can help pay for Medicare premiums when you turn 65. That includes Medicare Advantage plans, as well as Parts B and D premiums, although Medigap premiums are not eligible for HSA expenditure. While not all medical expenses are covered by Medicare, funding these costs through HSAs could optimize your healthcare spending in retirement. A 2022 study by Fidelity Investments estimated medical costs for a retired couple would be around USD 315,000 after taxes.

Consider your health savings account (HSA) an essential tool in your financial toolkit. Like getting a new phone, increasing HSA contribution limits for 2025 gives you more options to manage and invest in your healthcare. You can think of contributing to your HSA as downloading an app that gives you triple tax benefits—deductions on contributions, tax-free growth, and tax-free withdrawals for qualified medical expenses. This keeps your health coverage as current and efficient as new technology—making your HSA a critical component of your Paychex retirement planning strategy.

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Sources:

1. Fidelity Investments. 'HSA Contribution Limits 2024 and 2025.' Fidelity.com , 23 Jan. 2025, https://www.fidelity.com/learning-center/smart-money/hsa-contribution-limits . Accessed 5 Mar. 2025.

2. Plan Sponsor Council of America (PSCA). 'Helping Employees Enroll in HSAs.' PSCA.org , 9 Nov. 2023, https://www.psca.org/news/psca-news/2023/11/PR_2023_HSAreprot . Accessed 5 Mar. 2025.

3. Internal Revenue Service (IRS). 'Part III Administrative, Procedural, and Miscellaneous.' IRS.gov , May 2024, https://www.irs.gov/pub/irs-drop/rp-24-25.pdf . Accessed 5 Mar. 2025.

4. Woodruff Sawyer. 'IRS Releases 2025 HSA Contribution Limits and HDHP Deductible and Out-of-Pocket Limits.' Woodruffsawyer.com , 13 May 2024, https://woodruffsawyer.com/insights/2025-hsa-limits-released . Accessed 5 Mar. 2025.

5. Plan Sponsor Council of America (PSCA). 'HSAs: A Growing Retirement Savings Strategy.' 401k Specialist , Nov. 2023, https://401kspecialistmag.com/higher-numbers-of-hsas-positioned-as-retirement-savings-strategy . Accessed 5 Mar. 2025.

What type of retirement plan does Paychex offer to its employees?

Paychex offers a 401(k) retirement plan to its employees to help them save for retirement.

How can employees at Paychex enroll in the 401(k) plan?

Employees at Paychex can enroll in the 401(k) plan through the company’s HR portal or by contacting the HR department for assistance.

Does Paychex offer any matching contributions for the 401(k) plan?

Yes, Paychex provides a matching contribution for employees who participate in the 401(k) plan, subject to certain terms and conditions.

What is the maximum contribution limit for the Paychex 401(k) plan?

The maximum contribution limit for the Paychex 401(k) plan is determined by the IRS and may change annually; employees should check the latest guidelines for specifics.

Are there any fees associated with the Paychex 401(k) plan?

Yes, like many retirement plans, the Paychex 401(k) plan may have administrative fees, which are disclosed in the plan documents provided to employees.

Can employees at Paychex take loans against their 401(k) savings?

Yes, Paychex allows employees to take loans against their 401(k) savings, subject to the plan's rules and limits.

What investment options are available in the Paychex 401(k) plan?

The Paychex 401(k) plan offers a variety of investment options, including mutual funds, stocks, and bonds, allowing employees to diversify their portfolios.

How often can employees change their contribution amounts in the Paychex 401(k) plan?

Employees at Paychex can typically change their contribution amounts at any time, but changes may take effect in the next payroll cycle.

What happens to the Paychex 401(k) plan if an employee leaves the company?

If an employee leaves Paychex, they can roll over their 401(k) balance to another retirement account, cash out, or leave the funds in the Paychex plan, depending on the plan’s rules.

Is there a vesting schedule for the Paychex 401(k) plan?

Yes, Paychex has a vesting schedule for employer contributions, which means employees must work for a certain period to fully own those contributions.