A Health Savings Account (HSA) is a tax-advantaged savings account designed to help you pay for qualified medical expenses. Think of it as a personal healthcare fund that you control—not your employer, not your insurance company.
How It Works
- You contribute pre-tax money – Either through payroll deduction or direct contribution
- Money grows tax-free – Many HSAs offer investment options
- Spend on qualified expenses – Medical, dental, vision, prescriptions, and more
- Funds roll over – Unlike FSAs, your balance never expires
Who Can Open an HSA?
To be eligible, you must:
- Be enrolled in a High Deductible Health Plan (HDHP)
- Not be enrolled in Medicare
- Not be claimed as a dependent on someone else's tax return
- Not have other disqualifying health coverage
What Counts as an HDHP?
For 2026, your health plan qualifies as an HDHP if:
- Minimum deductible: $1,700 (individual) or $3,400 (family)
- Maximum out-of-pocket: $8,500 (individual) or $17,000 (family)
New for 2026: Many Bronze and Catastrophic health plans may qualify as HSA-compatible, subject to IRS rules and individual plan design.
Why HSAs Matter
Unlike a regular savings account, an HSA provides:
| Benefit | HSA | Regular Savings |
|---|---|---|
| Tax-deductible contributions | ✓ | ✗ |
| Tax-free growth | ✓ | ✗ |
| Tax-free withdrawals (medical) | ✓ | ✗ |
| Funds roll over yearly | ✓ | N/A |
| Portable when you change jobs | ✓ | N/A |
Bottom line: An HSA is one of the most tax-efficient ways to save for healthcare costs—now or decades from now.
Sources: IRS Revenue Procedure 2025-19 (2026 HDHP thresholds and contribution limits), IRS Publication 969 (HSA eligibility rules).