The HSA, Explained in Plain English

What an HSA is

A Health Savings Account is a tax-advantaged account for paying medical costs. You contribute money, it can grow through investments, and you withdraw it for qualified medical expenses. The account is yours for life, even if you change jobs or retire.

The triple tax advantage

Break one: contributions go in pre-tax or tax-deductible, which lowers your taxable income. Break two: the money grows tax-free while it sits in the account. Break three: withdrawals for qualified medical expenses come out tax-free.

No other common account stacks all three breaks in the same way.

The 2026 numbers

For 2026 you can contribute up to $4,400 with self-only coverage. The family coverage limit is $8,750. At age 55 or older you can add a $1,000 catch-up on top of your limit.

The plan behind it must qualify as a high-deductible health plan. The 2026 minimum deductible is $1,700 for self-only and $3,400 for family coverage. Any money your employer puts in counts toward your limit too.

How it differs from an FSA

HSA money rolls over year after year with no deadline. Many FSAs have a use-it-or-lose-it rule, so unspent money can disappear. The HSA also travels with you when you switch employers.

The tradeoff: you need that qualifying high-deductible plan to contribute. The two accounts follow different contribution rules.

After 65

Once you enroll in Medicare you can no longer contribute to an HSA. Money already in the account stays available for medical costs.

Before 65, non-medical withdrawals face income tax plus a penalty. After 65 the penalty ends and non-medical withdrawals are simply taxed as income.