An HSA (Health Savings Account) is a tax-advantaged account paired with a high-deductible health plan that lets you save pre-tax dollars for qualified medical expenses. Contributions, growth, and withdrawals for medical costs are all tax-free — a triple tax advantage no other account offers.
A Health Savings Account (HSA) is a savings account you can open only if you're enrolled in a qualifying high-deductible health plan (HDHP). Authorized under federal law, it is the only savings vehicle in the U.S. tax code that offers three tax breaks simultaneously: contributions reduce your taxable income, the money grows tax-free, and withdrawals for qualified medical expenses are never taxed. Money not spent in a given year rolls over indefinitely — HSAs have no "use it or lose it" rule.
For 2026, the IRS sets annual HSA contribution limits at $4,300 for self-only HDHP coverage and $8,550 for family coverage. Account holders age 55 or older can contribute an additional $1,000 catch-up contribution. Contributions can be made by you, your employer, or both — but the combined total cannot exceed the annual limit.
For 2026, a plan qualifies as an HDHP if it has a minimum deductible of $1,650 (self-only) or $3,300 (family) and an out-of-pocket maximum no higher than $8,300 (self-only) or $16,600 (family). You can verify whether your plan qualifies by checking with your insurer or reviewing IRS Publication 969.
HSA funds can be used tax-free for a wide range of costs: doctor visits and copays, prescriptions, dental and vision care, mental health services, certain over-the-counter medications, and medical equipment. The IRS list of qualified medical expenses is extensive. After age 65, you can withdraw HSA funds for any reason without penalty — you'll owe ordinary income tax on non-medical withdrawals, just like a traditional IRA.
Many HSA providers allow you to invest your balance once it exceeds a threshold (often $1,000–$2,000). Because there's no required minimum distribution and no expiration, some savers deliberately max out their HSA every year and invest the balance, preserving it for healthcare costs in retirement — where medical expenses are typically highest. The CFPB overview of HSAs explains the basics for new account holders.