Health Savings Accounts, commonly known as HSAs, are a unique tool for saving for future healthcare expenses, offering significant tax advantages.
Let’s explore some of the basics of HSAs and how you can leverage them for your personal—and financial—wellness.
Article overview
- Eligibility for an HSA
- Employer HSA Contributions & Limits
- Tax Advantages of HSAs
- HSA as an Extra Emergency Fund
- Conclusion
How to Qualify for Health Savings Accounts (HSAs) in 2026
To qualify for HSA contributions in 2026, you must be enrolled in either a high-deductible health plan (HDHP) or a bronze or catastrophic plan available through an exchange. As a result of the One Big Beautiful Bill Act, the IRS issued guidance to expand HSA eligibility to include bronze and catastrophic plans as of Jan. 1, 2026, "regardless of whether the plans satisfy the general definition of an HDHP." In 2025, only high-deductible health plans with an individual deductible of $1,650 or a family deductible of $3,300 were eligible for HSAs.
If you’re not in a high-deductible health plan, you might consider a Flexible Spending Account (FSA). While FSAs offer a nice benefit, they come with a “use-it-or-lose-it” rule: You must spend the entire amount you contribute within the same tax year or forfeit any unused funds. In contrast, HSAs allow you to accumulate funds over time, making them a more flexible option for many.
DOWNLOAD: Can I Make a Deductible Contribution to My HSA [flowchart]
2026 HSA Contributions and Limits
Most employers offer HSAs that allow you to contribute directly from your paycheck, which is a valuable perk. If your employer does not provide an HSA and you are in an eligible plan, you can open one independently.
For 2026, the HSA contribution limits have increased to $4,400 for individual coverage and $8,750 for family coverage, respectively. Those 55 and older may contribute an additional $1,000, regardless of marital status. Keep in mind that contributions from both you and your employer count towards these limits. For instance, if your employer contributes $1,000 annually to your family HSA, ensure that your monthly contribution does not exceed $645.83—($8,750 - $1,000)/12—to maximize the amount your employer can contribute.
For 2025, you could contribute up to $4,300 if your plan covered only yourself, and up to $8,550 for family coverage. Those 55 and older may contribute an additional $1,000, regardless of marital status ($5,300 maximum contribution for individuals, $9,550 maximum contribution for family coverage).
Although we are now in 2026, you can typically make contributions for the prior tax year until tax day, which is Wednesday, April 15, 2026, for 2025 returns. Be sure to check with your financial advisor or accountant before making a prior-year contribution
Tax Advantages
HSAs provide a tax deduction for contributions, and any investments within the account grow tax-free. When you withdraw funds for qualified medical expenses, those withdrawals are also tax-free; thus, HSAs are often referred to as being “triple tax-free” accounts.
You can withdraw money from your HSA at any time to cover current or past healthcare expenses, and there’s nothing wrong with regularly doing so. However, if you can cover most of your healthcare costs out-of-pocket, consider leaving your HSA funds untouched. This strategy allows you to invest those funds, potentially growing your balance significantly over time. A well-funded HSA can be invaluable in retirement, helping to cover health insurance premiums—whether Medicare or private insurance. Those funds can be particularly helpful if you retire before age 65 (Medicare eligibility age) since private health insurance is very costly.
Using Your HSA as an Extra Emergency Fund
Another strategy is to utilize your HSA as an additional emergency fund. You can reimburse yourself for past medical expenses with no time limit, enabling you to treat it as an additional safety net. Here’s how:
- Pay for Healthcare Expenses Upfront: Use your non-HSA funds to cover all healthcare costs.
- Invest Your HSA Contributions: Allow your HSA funds to grow over time by investing them.
- Track Your Expenses: Keep meticulous records of your medical expenses and receipts. Consider using an Excel file or a dedicated folder on your computer for easy access.
- Reimburse Yourself When Needed: If a significant, unexpected expense arises (health-related or not), you can reimburse yourself for past medical expenses, providing you with a cash influx.
Ideally, maintain a separate “Plan A” emergency fund to address unexpected costs, allowing your HSA to continue growing.
Conclusion
If you’re enrolled in a high-deductible health plan, take full advantage of an HSA by contributing as much as possible. Ideally, you should aim to max it out each year, especially if your employer makes contributions.
Investing your HSA dollars in low-cost, diversified index funds can help your account grow by more than just the contributions themselves. Remember, any growth through investments is tax-free. By doing this consistently over 20 years, you could very well become an HSA millionaire!
When retirement comes, leverage your HSA funds to cover health insurance premiums and other healthcare expenses, ensuring you have the financial resources needed as you age.
About the Author
Carla Adams is a CERTIFIED FINANCIAL PLANNER® practitioner who specializes in helping women build strong financial plans around their equity compensation, including Restricted Stock Units (RSUs) and company stock options. With over 15 years of experience in financial services, Carla has in-depth knowledge and expertise geared toward helping clients with complex financial situations. She enjoys boiling down complicated scenarios through practical examples and down-to-earth conversations.