Model your Health Savings Account balance over time — including tax savings, employer contributions, and investment growth.
A Health Savings Account (HSA) lets you save pre-tax money for qualified medical expenses. To be eligible, you must be enrolled in a High-Deductible Health Plan (HDHP) — in 2024, that means a deductible of at least $1,600 (self-only) or $3,200 (family). You cannot be enrolled in Medicare or claimed as a dependent.
HSAs offer three tax advantages: (1) Contributions are pre-tax or tax-deductible, reducing your taxable income. (2) Investment growth is tax-free. (3) Withdrawals for qualified medical expenses are tax-free. No other account type offers all three simultaneously.
Yes — most HSA providers allow you to invest your balance once it exceeds a threshold (typically $1,000–$2,000). Many financial advisors recommend a "pay out of pocket now, invest and grow, reimburse yourself later" strategy to maximise investment time.
Unlike FSAs, HSA funds roll over indefinitely — there is no use-it-or-lose-it rule. After age 65, you can withdraw for any reason (like a traditional IRA), but non-medical withdrawals are taxed as ordinary income.
Qualified expenses include deductibles, copays, prescriptions, dental, vision, mental health care, and many more. See IRS Publication 502 for the full list. Non-qualified withdrawals before age 65 incur a 20% penalty plus income tax.