What Is a Health Savings Account (HSA)?

A Health Savings Account (HSA) is one of the most powerful financial tools available for managing healthcare costs. Often called the "triple tax advantage" account, an HSA allows you to save money specifically for medical expenses while enjoying significant tax benefits. Yet many eligible Americans either don't have an HSA or aren't using theirs to its full potential.

How Does an HSA Work?

An HSA is a tax-advantaged savings account that you can use to pay for qualified medical expenses, including deductibles, copayments, coinsurance, and many other healthcare costs. Here's what makes it special:

• Tax-deductible contributions. The money you contribute to your HSA reduces your taxable income. If you contribute through payroll deductions, the money is taken out pre-tax, saving you on income tax and FICA taxes.
• Tax-free growth. Any interest or investment earnings in your HSA grow tax-free. Many HSA providers allow you to invest your balance in mutual funds once it reaches a certain threshold.
• Tax-free withdrawals. When you use HSA funds for qualified medical expenses, you pay no taxes on the withdrawal. This triple tax benefit is unique among savings vehicles.

Who Is Eligible for an HSA?

To open and contribute to an HSA, you must be enrolled in a High Deductible Health Plan (HDHP). For 2026, the IRS defines an HDHP as a plan with a minimum deductible of $1,650 for individual coverage or $3,300 for family coverage. You also cannot be enrolled in Medicare, claimed as a dependent on someone else's tax return, or have other disqualifying health coverage. Contribution limits for 2026 are $4,300 for individuals and $8,550 for families, with an additional $1,000 catch-up contribution allowed for those age 55 and older.

HSA as a Long-Term Savings Strategy

One of the most overlooked benefits of an HSA is its potential as a retirement savings tool. Unlike a Flexible Spending Account (FSA), HSA funds roll over year after year with no expiration. You can invest your HSA balance for long-term growth and use the funds in retirement for medical expenses tax-free, or for any purpose after age 65 with only income tax due, similar to a traditional IRA. This makes the HSA an excellent complement to your 401(k) or other retirement accounts.

Whether you're considering an HDHP for the first time or want to maximize your existing HSA, our advisors can help you develop a strategy that saves you money now and in the future. Contact Resilience Health Advisors to learn more about HSA-eligible plans and how to get the most from your health savings.