A Health Savings Account (HSA) is a tax-advantaged savings account designed to help individuals and families cover medical expenses. Think of it as a "supercharged" savings tool specifically for healthcare costs. HSAs were created by the U.S. government in 2003 to encourage people to take more control over their healthcare spending. Unlike traditional bank accounts, HSAs offer triple tax benefits: contributions are tax-deductible, earnings grow tax-free, and withdrawals for qualified medical expenses are also tax-free. This makes them a powerful way to build a nest egg for health-related needs, both now and in retirement.

HSAs must be paired with a High-Deductible Health Plan (HDHP), which is a type of health insurance with higher deductibles but lower premiums. In 2026, an HDHP qualifies if it has a minimum deductible of $1,650 for self-only coverage or $3,300 for family coverage, and maximum out-of-pocket limits of $8,300 for self-only or $16,600 for family (these limits are projected and may be adjusted by the IRS). If you have an HDHP, you can open an HSA through a bank, credit union, or insurance company. Once funded, the money is yours forever—it's portable even if you change jobs or insurance.

• Not everyone can open an HSA. To qualify in 2026:
• You must be enrolled in an HDHP (as defined above) on the first day of the month.
• You cannot be enrolled in Medicare (though you can keep an existing HSA if you start Medicare).
• You can't be claimed as a dependent on someone else's tax return.
• You can't have other health coverage like a non-HDHP plan, FSA (Flexible Spending Account), or certain VA benefits (exceptions apply for limited coverage like dental or vision).
• No age requirement to contribute, but you can withdraw for non-medical expenses penalty-free after age 65.

If you're self-employed or your employer offers an HDHP, you're eligible. Families can contribute to one HSA (typically the policyholder's), or individuals can have separate accounts. Note: If you're married and one spouse has family coverage, both can contribute to the family limit.

• Individual (Self-Only Coverage): $4,400 (up from $4,150 in 2025).
• Family Coverage: $8,750 (up from $8,550 in 2025).
• Catch-Up Contributions (Age 55+): An additional $1,000 for both individual and family plans (totaling $5,400 self-only or $9,750 family if eligible).

These are the maximums you can contribute from all sources (personal, employer, etc.). Contributions can be made anytime during the year or even up to April 15 of the following year (e.g., for 2026 taxes). If you have employer-sponsored coverage, they might contribute too, but it counts toward your limit. Over-contributing incurs a 6% excise tax, so track it carefully.

1. Contributions: Deductible from your taxable income (pre-tax if through payroll, or deductible on your tax return if post-tax). This reduces your federal (and often state) taxes. For example, if you're in the 24% tax bracket and contribute $4,400 (individual), you save ~$1,056 in taxes.
2. Growth: Earnings from investments (interest, dividends, capital gains) grow tax-free, similar to a Roth IRA.
3. Withdrawals: Tax-free if used for qualified medical expenses (no time limit—save receipts forever). After age 65, non-medical withdrawals are taxed as income but penalty-free (like a traditional IRA).

This combo makes HSAs better than FSAs (which expire annually) or regular savings accounts. They're also portable—you keep the account even if you change jobs or insurance.

• Doctor visits, hospital stays, surgeries, and prescription drugs.
• Dental and vision care (e.g., cleanings, glasses, LASIK).
• Mental health services (therapy, counseling).
• Over-the-counter meds (pain relievers, cold medicine) if prescribed.
• Long-term care services and insurance premiums (limited).
• Alternative treatments like acupuncture, chiropractic (if medically necessary).
• COBRA premiums, Medicare parts B/D (after age 65), or unemployment health insurance.

Non-qualified withdrawals before age 65 incur income tax + 20% penalty (e.g., using for a vacation). After 65, non-medical withdrawals are taxed as income only (no penalty). Always keep receipts—IRS audits can happen up to 3 years later.

• Investment Choices: Stocks, bonds, mutual funds, ETFs (e.g., low-cost Vanguard funds). Some providers like Fidelity or HealthEquity offer robust options with low fees.
• Growth Strategy: Treat it as a retirement account—invest aggressively when young, shift to conservative as you age. Average returns ~7-10% annually (stock-heavy portfolio).
• Fees: Watch for maintenance fees (~$2-5/month) or investment fees (0.05-0.5%). Choose fee-free providers like Fidelity HSA.
• Rollover: Funds roll over year to year, growing tax-free indefinitely.

Pro tip: Contribute max, invest early, and use for retirement healthcare (e.g., a $4,400 annual contribution at 7% return over 30 years could grow to ~$400k).

• Employer Role: If offered through work, employers can contribute (e.g., $500-$1,000/year), which doesn't count toward your limit but is tax-free. Some match like 401(k)s.
• Portability: The HSA is yours forever—change jobs, keep the account. Roll over from one HSA to another tax-free.
• Family Dynamics: Spouses can have separate HSAs or share one; contributions can be split (e.g., one spouse contributes to family limit).

• Vs. FSA: HSAs roll over indefinitely; FSAs expire annually (use-it-or-lose-it). HSAs require HDHP; FSAs don’t. HSAs can be invested; FSAs can’t.
• Vs. Traditional IRA: HSAs are triple tax-free for medical; IRAs are taxable on withdrawals.
• Vs. Roth IRA: Both tax-free growth/withdrawals, but HSAs are for medical only (pre-65) and have no income limits for contributions.

1. Eligibility Check: Confirm HDHP coverage with your insurer.
2. Choose Provider: Banks like Fidelity, HSA Bank, Lively, or Optum Bank (compare fees, investments).
3. Open Account: Online or through employer (free, ~15 mins).
4. Contribute: Payroll deductions (pre-tax) or direct deposits (deductible on taxes).
5. Track Expenses: Use debit card or app for payments; save receipts.
6. Invest: Once balance hits threshold, allocate to funds via provider portal.
7. Taxes: Report contributions/withdrawals on Form 8889 (IRS).

For 2026, if you're 55+, add $1,000 catch-up to max out. Consult a tax pro (like your CPA) for your self-employed setup.

In summary, HSAs are a no-brainer for HDHP holders—tax savings, growth, and flexibility make them a "dummies-proof" way to invest in health. If you're eligible, start contributing in 2026 to build that nest egg!