A health savings account (HSA) lets you set aside pre-tax money to pay for medical costs. The money grows tax-free as well. While HSAs can help you save on medical bills, there are rules, requirements, and limits. Before opening an HSA, consider how much money you can put in, what medical costs you can use it for, and if your health insurance plan allows you to have an HSA.

HSA Eligibility Requirements

If you want a health savings account, you must choose a 澳洲幸运5官方开ꦏ奖结果体彩网:high-deductible health plan (HDHP) when you sign up for health insurance. Usually, HDHPs have lower monthly premiums than other types of health insurance plans, such as preferred provider organizations and health maintenance organizations (澳洲幸运5官方开奖结果体彩网:PPOs and HMOs). But they have higher deductibles, so you might pay more out of pocket for medical care before your insurance kicks in. (A 澳洲幸运5官方开奖结果体彩网:deductible is how much you♚ pay for covered medical services and prescriptions before y💎our insurance starts to cover costs.)

In 2025, the minimum annual deductible for an HDHP is $1,650 ($3,300 for family coverage). No HDHP can have an annual 澳洲幸运5官方开奖结果体彩网:out-of-pocket limit higher than $8,300 ($16,600 for family coverage).

Although you can keep and make qualified withdrawals from your HSA plan for life, even if you leave your job or switch health plans, ꦕyou won’t be able to contribute to it if any of thꦦe following are true: 

• You’re no longer covered by an HDHP. 
• You have any other health coverage, including coverage from your spouse, Medicare, or a 澳洲幸运5官方开奖𓄧结果体彩网:flexible spending arrangement (FSA).
• Someone else can claim you as a dependent on their tax return.

HSA Contribution Limits

The Internal Revenue Service (IRS) limits how much you can put into a health savings account. In 2025, you can contribute up to $4,300 as an individual or up to $8,550 if your HDHP covers your whole family. Once you turn 55, you can also add an extra $1,000 each year. This is sometimes called a catch-up contribution. However, as explained above, you can’t add more money to your HSA once you start getting Medicare.

HSAs and Taxes

You won't pay taxes if your HSA money comes directly from your paycheck. You can also add money to your HSA on your own, even if you’re not working for someone else. Since these contributions are made with money you’ve already paid taxes on, you can deduct them on your tax return, which can lower the amount of tax you owe.

Your contributions grow tax-deferred. You won’t need to pay federal taxes on your gains or when you use the HSA funds for a qualified 澳洲幸运5官方开奖结果体彩网:medical expense. 

An HSA can only be used for qualified medical expenses. If you pay for any other expense, including non-qualified health care expenses, you’ll have to pay income tax and a 20% additional tax on the amount you withdraw.

After age 65, or if you become disabled, you can still withdraw HSA funds for qualified medical expenses without paying federal 澳洲幸运5官方开奖结果体彩网:income tax. For non-qualified expense withdrawals, you would still pay income tax, but you won’t have to pay the 20% additional tax. Your estate can als🦩o withdraw the funds without paying the 20% additional tax if you die.

What Can HSA Funds Be Used For?

You can use your HSA for many medical costs. This includes things like treating an illness, getting a diagnosis, and preventive care. These costs can come from a doctor or other medical professional. You can also use your HSA for prescriptions, over-the-counter medicine, contraceptives, and menstrual products. Plus, you can use it to pay for 澳洲幸运5官方开奖结果体彩网:copays, coinsurance, and your health plan’s deductible.

A medical expense can be considered qualified if incurred by your spouse, any dependents you claim on your tax return, or anyone you could’ve claimed as a dependent but did not because of certain IRS rules.

You can’t use your HSA funds for insurance premiums unless the premiums paid for 澳洲幸运5官方开奖结果体彩网:long-term care insurance, COBRA, or other types of health insurance received while unemployed, and Medicare.

Youꦅ can🐲 use the money in your HSA whenever you want. 

HSA Rollovers and Transfers

“The money you contribute toﷺ your HSA never expires and stays with you even if you change jobs,” said Saïd Israilov, certified financial planner and wealth manager at Israilov Financial. 

When you leave your job, switch to a non-HSA-eligible health plan, or retire, you can still use the funds in the account for qualified medical expenses.

However, if you start another HSA, you may want to roll over your previous HSA into your new H♚SA to consolidate them. One reason to do this is convenience. The other is that some HSA companies charge f🌊ees, and rolling over the HSA may help you avoid them.

A rollover with your HSA will likely be tax-free if investments aren’t sold during the process, which could result in 澳洲幸运5官方开奖结果体彩网:capital gains taxes in some states. When you request a rollover, depending on how your old HSA company operates, it may transfer funds directly to the new HSA company or require you to sell your investments first and transfer the cash.

The Bottom Line

ꦦIf you choose a high-deductible health plan (HDHP), you’ll likely have higher out-of-pocket costs. You’ll need to pay more, sometimes thousands of dollars, before your insurance starts covering costs. An HSA can help by covering significant medical expenses. It also has advantages 🅰if you don’t use it often since the money grows tax-free, helping augment your retirement savings.