Quick answer: A Health Savings Account (HSA) is a tax-advantaged account for medical expenses that you can open only if you are covered by a high-deductible health plan (HDHP) and have no other disqualifying coverage. Contributions are tax-deductible, growth is tax-free, and withdrawals for qualified medical costs are tax-free.
Key Takeaways
- You need an HSA-eligible high-deductible health plan to contribute
- Contributions, growth, and qualified withdrawals are all tax-free
- Funds roll over forever and can be invested
- Contribution limits change yearly; see IRS Publication 969
Eligibility checklist
- Enrolled in an HSA-eligible HDHP (the plan will say so)
- Not enrolled in Medicare
- Not claimed as a dependent on someone else’s tax return
- No other non-HDHP coverage such as a general-purpose FSA
The triple tax advantage
Money goes in pre-tax (or is deductible), grows tax-free, and comes out tax-free for qualified expenses. No other account offers all three.
Contribution limits
The IRS sets annual limits for self-only and family coverage, plus a catch-up amount for people 55 and older. Limits change each year; check IRS Publication 969 or your HSA provider for the current figures.
What you can pay for
Deductibles, copays, prescriptions, dental, vision, and many over-the-counter items. Premiums generally do not qualify except for COBRA, long-term care, and Medicare premiums after 65.
Why people treat HSAs like retirement accounts
Funds roll over forever, can be invested, and after age 65 can be withdrawn for any purpose (taxed as income if not medical). Many savers pay current medical bills out of pocket and let the HSA grow.
FAQ
What is the difference between an HSA and an FSA? FSAs are employer-owned, usually use-it-or-lose-it, and do not require an HDHP. HSAs are yours permanently.
Can I keep my HSA if I change jobs? Yes, the account belongs to you.
What if I use HSA money for non-medical costs before 65? You owe income tax plus a 20% penalty.
Sources
Last updated: August 16, 2026. Written by the InfoBrief Editorial team. We link to official government and company sources and update articles when facts change. See our disclosure.