Health Savings Accounts (HSAs)* are designed to do just that.

These specialized savings tools pair with HSA-eligible plans—including many available through the Health Insurance Marketplace—to help you plan ahead, reduce your tax burden, and pay for qualified healthcare expenses with greater confidence.

Whether you’re saving for next year’s check-ups or long-term medical needs, HSAs offer unique financial flexibility and control. Today, they’re not just about saving money—they’re about building a smarter financial strategy for your health tomorrow.

Now, let’s dive into five key things to know about how health savings accounts work, how they support your healthcare goals and how to get started with one. 

1. You Get Tax Breaks

One of the biggest benefits of a health savings account is its triple tax advantage—a rare combination that makes HSAs one of the most tax-friendly ways to save for healthcare.

Here’s what that actually means:

• Contributions are tax-deductible. The money you put into your HSA lowers your taxable income for the year, which can reduce what you owe at tax time.
• Earnings grow tax-free. If your HSA earns interest or investment returns, you won’t pay taxes on that growth—unlike traditional savings or investment accounts.
• Withdrawals are tax-free—when used for qualified medical expenses. You can use your HSA to pay for eligible costs like doctor visits, prescriptions, dental care, and even some over-the-counter items, all without paying taxes on the withdrawal.

That adds up to serious long-term savings—especially if you contribute regularly and don’t use your funds right away.

Just be aware: if you use your HSA for non-medical expenses before you turn 65, the withdrawal will be taxed as income and you’ll have to pay a 20% penalty. However, after the age of 65, you can use the money for anything, though non-medical withdrawals will be taxed like regular income (similar to a 401(k) or IRA).

2. Your Money Rolls Over

Unlike flexible spending accounts (FSAs), your HSA funds don’t expire at the end of the year. The money you save rolls over from year to year and continues to grow—giving you more flexibility in how and when you use it.

Your HSA is also portable.

If you change jobs or health plans, the account stays with you. And you can use it to pay for eligible expenses for your spouse or dependents, not just yourself.

3. Employers Can Contribute, Too

A Health Savings Account isn’t just something you fund on your own—others can help contribute, too. In fact, that’s one of the features that makes HSAs especially powerful.

You, your employer, a spouse, or even another family member can deposit money into your HSA. These contributions can be made through payroll deductions, direct deposits or one-time transfers.

No matter who adds the funds, the money is yours to keep and control.

However, there are annual contribution limits set by the IRS, and it’s important to stay within these to avoid penalties. For the 2025 tax year, the limits are:

• $4,300 if you’re covered by an individual high-deductible health plan
• $8,550 if your HDHP covers you and at least one other family member
• $1,000  additional “catch-up” contributions if you’re age 55 or older

These limits apply to the total amount contributed across all sources—including your own deposits and any contributions made by your employer and others on your behalf.

Keep in mind: employer contributions are not taxable income, and they count toward your annual limit. That means if your employer adds $1,000 to your HSA this year, you can contribute up to the remaining allowable amount based on your coverage level.

Not all employers offer HSA contributions, but if yours does, it’s a great way to boost your healthcare savings without impacting your take-home pay.

4. You Can Invest Your HSA Funds

Once your HSA balance reaches a certain amount (this varies by provider), you may be able to invest those funds in a way similar to a retirement account. This gives your money a chance to grow over time—tax-free.

Marketplace HSA-eligible plans often offer the most flexibility for HSA investment options. It’s a great way to plan ahead, especially if you expect future medical expenses or want to supplement retirement savings with tax-free healthcare dollars.

5. You Must Enroll in a High-Deductible Health Plan

To open and contribute to an HSA, you must be enrolled in an HSA-eligible high-deductible health plan (HDHP). These plans have lower monthly premiums but higher deductibles—making them a good fit for people who want to save on premiums and manage routine care out of pocket.

HSA-eligible plans are available through the Health Insurance Marketplace, the number of options will vary depending on where you live.

How to Get Started with a Health Savings Account

Opening a Health Savings Account is easier than you might think—and it starts with choosing the right health plan.

If you’re shopping for coverage through the Health Insurance Marketplace, here’s how to get started:

1. Look for HSA-eligible health plans. When comparing plans, check the plan name and description for the term “HSA eligible” or “HSA qualified.” These are typically high-deductible health plans (HDHPs) that meet the IRS criteria for pairing with a Health Savings Account.
2. Use filters to narrow your options. If you’re shopping on platforms like Healthcare.gov or Ambetter Health, you can apply filters that show only HSA-eligible plans—making it easier to compare your options side by side.
3. Select your health plan and complete enrollment. Once you’ve found the HSA-eligible plan that fits your needs and budget, complete the enrollment process. Make note of your plan start date, since you’ll need to be actively enrolled in an HSA-eligible HDHP to contribute to an HSA.
4. Choose a financial institution to open your HSA. You can open an HSA through many banks, credit unions or specialized HSA providers. Look for one that offers features that fit your needs, such as low fees, online access, debit card convenience or investment options. You’ll be able to contribute directly, set up automatic transfers, and manage your account much like a standard savings account—with added tax benefits.
5. Start contributing and tracking expenses. Once your account is active, you can begin contributing up to the annual IRS limit. Be sure to save your receipts and track your eligible medical expenses so you can use your funds tax-free. Even small, regular contributions can add up over time—and because your money rolls over year to year, there’s no pressure to spend it the right way.

Why It’s Smart to Start Early

You don’t have to wait until you face a major medical bill to benefit from an HSA. In fact, starting early is one of the smartest ways to use one. The sooner you begin contributing—even in small amounts—the more opportunity your savings have to grow tax-free.

From upcoming healthcare needs to long-term planning, an HSA gives you financial control and peace of mind. It’s a proactive step towards smarter, more flexible healthcare spending.

Questions About Health Savings Accounts