HSA (Health Savings Account) Explained

What Is an HSA?

A Health Savings Account (HSA) is a tax-advantaged savings account paired with a qualifying high-deductible health plan (HDHP). Money goes in pre-tax, grows tax-free, and comes out tax-free when used for qualified medical expenses. It is often called a triple tax advantage — and it is one of the most powerful savings tools available to people who are generally healthy and want to reduce overall health care costs.

Who Can Open an HSA?

To contribute, you must be enrolled in an IRS-qualified HDHP. In 2026, that means a plan with a minimum deductible of $1,700 (individual) or $3,400 (family). You also cannot be enrolled in Medicare, claimed as a dependent, or covered by another non-HDHP plan.

2026 HSA Contribution Limits

• Individual coverage: $4,400
• Family coverage: $8,750
• Catch-up (age 55+): additional $1,000

What Can You Use an HSA For?

• Deductibles, copays, and coinsurance
• Prescription medications
• Dental care (cleanings, fillings, orthodontia)
• Vision care (glasses, contacts, LASIK)
• Mental health services
• Over-the-counter medications

After age 65, HSA funds can be withdrawn for any purpose. Non-medical withdrawals are taxed as ordinary income, similar to a traditional IRA.

The Rollover Advantage

Unlike a Flexible Spending Account (FSA), HSA funds never expire. Unused balances roll over every year and can be invested for long-term growth. Many people pay current medical expenses out of pocket while the HSA grows, then use the accumulated balance in retirement when health costs typically rise.

Is an HSA-Eligible Plan Right for You?

HSA-eligible plans tend to make sense for people who are generally healthy, have savings to cover the higher deductible, and benefit from the tax savings. They may not be the right fit if you use care frequently or if a lower-deductible Silver plan would save you more overall. A licensed advisor can help you run those numbers.