Contributed by: JanaA, FreeTaxUSA Agent, Tax Pro
Health savings accounts (HSAs) are one of the most valuable ways to save for qualified medical expenses. If you're enrolled in an HSA-eligible high-deductible health plan (HDHP), you may also have access to a helpful feature called a pass-through contribution.
While the term might sound complex, it's a simple and valuable benefit—if your plan offers it. Here's everything you need to know about what HSA pass-through contributions are, how they work, and how they impact your healthcare finances.
What is an HSA pass-through contribution?
An HSA pass-through contribution is an amount that your health plan deposits directly into your personal HSA. The funds are pulled from your health insurance premiums.
Instead of your entire health insurance premium going toward administrative costs and future claims, the insurance carrier essentially gives a designated chunk of that money back to you. This money "passes through" the health plan and lands directly in your HSA, where it becomes yours to keep, invest, or spend on eligible medical expenses.
Because the pass-through contribution is tied to an employer-sponsored healthcare plan, it will be reported on your W-2 in Box 12 with code W, combined with any employer contribution.
How does it work in practice?
Let’s look at a practical example of how an HSA premium pass-through functions:
- You enroll: You sign up for an HSA-eligible high deductible health plan with a pass-through contribution.
- Premiums are paid: Every month, your premium is paid to the insurance company (usually split between you and your employer via payroll deductions).
- The pass-through contribution is deposited: Each month (or sometimes as a lump sum at the start of the year), your insurance company automatically deposits a set amount of money into your HSA.
For example, your health plan provides a $1,200 annual pass-through contribution for self-only coverage. Every month, the health plan will deposit $100 into your HSA. Over the course of the year, you'll accumulate $1,200 in tax-free money.
Key benefits of pass-through contributions
An HSA pass-through contribution can make a high-deductible health plan more affordable.
- It helps cover out-of-pocket costs. You can use the money to pay for doctor visits, prescriptions, or other qualified expenses.
- It lowers the impact of a high-deductible plan. The money gives you a head start on healthcare costs before you meet your deductible.
- The money stays with you. HSA funds roll over from year to year, so you don’t lose unused money. And the plan stays with you, even if you change employers.
- It offers tax advantages. The money goes into your HSA tax-free, can grow tax-free, and can be used tax-free for qualified medical expenses.
Crucial rules and considerations
While pass-through contributions are incredibly valuable, there are a few important IRS rules and logistical details to keep in mind:
It counts toward your annual IRS limit
The IRS sets an annual limit on how much can be contributed to an HSA each year. This includes:
- Your own contributions
- Employer contributions
- Pass-through contributions from your health plan
The 2025 HSA contribution limit is:
- $4,300 for self-only coverage
- $8,550 for family coverage
For 2026, the limit is:
- $4,400 for self-only coverage
- $8,750 for family coverage
** If you’re age 55 or older by the end of the tax year and remain HSA-eligible, you may be able to contribute an additional $1,000. This catch-up amount is separate from the self-only or family limit.
For example, if your family plan has a pass-through contribution of $2,000 for the 2026 tax year, and your employer contributes $1,200, the maximum additional amount you can contribute from your own paycheck is $5,550 ($8,750 total limit - $2,000 pass-through contribution - $1,200 employer contribution).
Pro-rated for mid-year changes
If you enroll in the plan partway through the year, you may receive only part of the full pass-through amount. In most cases, you receive contributions only for the months you’re covered by the plan.
You must be eligible for an HSA
To have an HSA, you can’t be covered by non-HDHP health insurance (such as Medicare, TRICARE, or a spouse's traditional health plan). You also can’t be claimed as someone else’s dependent.
If you enroll in an HDHP with a pass-through feature but aren’t eligible to open an HSA, the insurance company will usually divert the pass-through money into a health reimbursement arrangement (HRA) instead. HRAs can still be used to pay medical expenses, but unlike an HSA, HRA funds don't travel with you if you leave the health plan.
Final Thoughts
An HSA pass-through contribution is a valuable benefit that can help reduce your healthcare costs. By depositing part of your premium into a tax-advantaged savings account, it helps bridge the gap between high deductibles and out-of-pocket costs.
If your health plan offers this feature, it’s worth comparing the numbers. An HSA pass-through contribution may make a high-deductible health plan a more affordable and attractive option.