Health Savings Account (HSA) Tax Benefits

Health Savings Account Tax Benefits

What Is an HSA?

A Health Savings Account is a tax-advantaged account available to people enrolled in a High-Deductible Health Plan (HDHP).

The Triple Tax Advantage

1. Contributions are tax-deductible (or pre-tax if through employer)
2. Growth is tax-free (invest the balance in mutual funds)
3. Withdrawals for medical expenses are tax-free

2025 Contribution Limits

• Individual: $4,300
• Family: $8,550
• Catch-up (55+): Additional $1,000

What Qualifies as an HDHP?

• Minimum deductible: $1,650 (individual) / $3,300 (family)
• Maximum out-of-pocket: $8,300 (individual) / $16,600 (family)

Qualified Medical Expenses

• Doctor visits, prescriptions, dental, vision
• Mental health services
• Long-term care insurance premiums
• Medicare premiums (at age 65)

HSA in Retirement

At age 65, you can withdraw HSA funds for ANY reason (not just medical) without penalty. You'll pay ordinary income tax on non-medical withdrawals, making it similar to a traditional IRA.

Best Strategy

Invest your HSA, pay medical expenses out of pocket now, and save receipts. Withdraw tax-free later using those old receipts.

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Have an HDHP? Make sure you're maximizing your HSA contributions each year.