Hi, you may be wondering, What Is an HSA?

A Health Savings Account (HSA) is a tax-advantaged medical savings account that allows individuals to set aside money for qualified out-of-pocket medical expenses. HSAs are paired with high-deductible health plans (HDHPs)—a type of health insurance with lower monthly premiums and higher deductibles compared to traditional plans.

Triple Tax Benefit

HSAs offer a unique triple tax advantage:

Contributions are tax-deductible

Earnings grow tax-free

Withdrawals for qualified medical expenses are tax-free

The money in an HSA is owned by the individual and rolls over year to year if not used.

2025 HSA Contribution Limits (Updated)

To be eligible to contribute to an HSA, you must be enrolled in an HDHP and not have any other health coverage that pays medical expenses before your deductible is met (e.g., traditional plans or a flexible spending account (FSA)).

2025 IRS Contribution Limits:

Individual coverage: Up to $4,150

Family coverage: Up to $8,300

Catch-up contribution (age 55+): Additional $1,000

How Can You Use HSA Funds?

HSAs can be used to pay for a variety of qualified medical expenses, including:

Health insurance deductibles and co-payments

Prescriptions

Vision and dental care

Chiropractic care, acupuncture, and other approved alternative treatments

You can use an HSA debit card, checks, or online bill pay to access your funds. It’s essential to keep receipts as documentation for tax purposes.

HSA as a Retirement Tool

HSAs aren’t just for short-term medical expenses. Over time, HSA funds can be invested, allowing them to grow tax-free—similar to a traditional IRA. After age 65, funds can be withdrawn for any purpose (not just medical expenses), though non-medical withdrawals are taxable.

This makes an HSA a powerful tool for retirement savings, especially for covering medical expenses in your later years.

Is an HSA Right for You?

While HSAs offer many benefits, they are not ideal for everyone.

Consider the following:

✅ Great for:

Individuals who are healthy and have minimal ongoing medical expenses

Those looking to save on taxes or build a healthcare-focused retirement fund

⚠️ May not be ideal for:

Individuals with chronic health conditions

Anyone anticipating high healthcare costs who may struggle with a high deductible

Final Thoughts

A Health Savings Account (HSA) is a flexible, tax-advantaged way to manage healthcare costs and save for the future. However, it’s important to evaluate whether an HDHP suits your health and financial situation.

Would you like help reviewing your options or estimating your eligible HSA contributions? Contact us today to get personalized support.