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For Progressive 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, Progressive 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 Progressive 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 Progressive 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 Progressive retirement planning strategy.
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- Medicare Open Enrollment for Corporate Employees: Cost Changes in 2024!
- Stages of Retirement for Corporate Employees
- 7 Things to Consider Before Leaving Your Company
- How Are Workers Impacted by Inflation & Rising Interest Rates?
- Lump-Sum vs Annuity and Rising Interest Rates
- Internal Revenue Code Section 409A (Governing Nonqualified Deferred Compensation Plans)
- Corporate Employees: Do NOT Believe These 6 Retirement Myths!
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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 is the 401(k) plan offered by Progressive?
Progressive offers a 401(k) plan that allows employees to save for retirement through pre-tax contributions, helping them build a secure financial future.
Does Progressive match employee contributions to the 401(k) plan?
Yes, Progressive provides a matching contribution to employees' 401(k) plans, which helps enhance retirement savings.
What is the maximum contribution limit for Progressive's 401(k) plan?
The maximum contribution limit for Progressive's 401(k) plan aligns with IRS guidelines, which are updated annually.
Can employees at Progressive choose how to invest their 401(k) contributions?
Yes, employees at Progressive can choose from a variety of investment options within the 401(k) plan to suit their individual risk tolerance and retirement goals.
At what age can employees access their 401(k) funds at Progressive?
Employees can generally access their 401(k) funds at Progressive without penalty once they reach the age of 59½, subject to certain conditions.
Is there a vesting schedule for Progressive's 401(k) matching contributions?
Yes, Progressive has a vesting schedule for its matching contributions, which means employees must work for a certain period before they fully own those contributions.
How often can employees at Progressive change their 401(k) contribution amounts?
Employees at Progressive can change their 401(k) contribution amounts at any time, allowing for flexibility in their savings strategy.
Does Progressive offer financial education resources for employees regarding their 401(k) plan?
Yes, Progressive provides financial education resources and tools to help employees make informed decisions about their 401(k) investments.
Can employees take loans against their 401(k) at Progressive?
Yes, Progressive allows employees to take loans against their 401(k) balance under certain conditions, providing access to funds when needed.
What happens to an employee's 401(k) if they leave Progressive?
If an employee leaves Progressive, they have several options for their 401(k), including rolling it over to a new employer's plan or an IRA.
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