{"id":24614,"date":"2026-04-28T01:50:36","date_gmt":"2026-04-28T01:50:36","guid":{"rendered":"https:\/\/incredipros.com\/?p=24614"},"modified":"2026-04-28T01:50:37","modified_gmt":"2026-04-28T01:50:37","slug":"what-is-a-health-savings-account-hsa","status":"publish","type":"post","link":"https:\/\/incredipros.com\/?p=24614","title":{"rendered":"What Is a Health Savings Account (HSA)?"},"content":{"rendered":"
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With health insurance premiums and costs rising each year, it\u2019s no surprise that folks are always looking for ways to save money on medical expenses.\u00a0<\/p>\n

That\u2019s where the Health Savings Account (HSA) comes in.\u00a0<\/p>\n

HSAs are pretty popular nowadays. Approximately 34\u00a0million people use them to save and pay for medical expenses.1<\/sup>\u00a0But you may be asking,\u00a0What is a Health Savings Account? How does it work? And is it the best option for my family?<\/em><\/p>\n

Let\u2019s take a closer look at some of the most common questions people ask about Health Savings Accounts\u2014and learn how an HSA can help you save money on medical expenses!\u00a0<\/p>\n

What Is an HSA?<\/h2>\n
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HSAs are tax-advantaged savings accounts that can help you pay for medical expenses\u00a0tax-free<\/em>\u00a0now and in the future. It\u2019s like an extra emergency fund just for medical costs!<\/p>\n<\/blockquote>\n

You have to be enrolled in a high-deductible health plan (HDHP) to get a Health Savings Account. A higher deductible basically means you\u2019ll need to pay more out of pocket\u00a0before<\/em>\u00a0your insurance kicks in. But\u00a0in exchange, you get lower monthly premiums and the option to put money into an HSA to save up for your medical costs.<\/p>\n

Am I Eligible for an HSA?<\/h2>\n

As mentioned above, you\u00a0have<\/em>\u00a0to\u00a0have an HSA-eligible high-deductible health plan\u00a0to\u00a0open up an HSA\u00a0or put money into one.\u00a0No exceptions.<\/em>\u00a0You can find an HSA-qualified health plan through your employer (if they offer one) or\u00a0an independent insurance agent.\u00a0<\/p>\n

For 2022, an HDHP must have a minimum annual deductible of $1,400 for single coverage and $2,800 for family coverage.2<\/sup> The out-of-pocket maximum (which includes your deductible, copayments and coinsurance, but not your premiums) is $7,050 for singles and $14,100 for families.3<\/sup> That\u2019s the most you\u2019ll pay for medical costs before your insurance covers 100% of the rest.<\/p>\n

Here are the numbers for 2023: An HDHP must have a minimum annual deductible of $1,500 for single coverage and $3,000 for family coverage.4<\/sup> The out-of-pocket maximum bumps up to $7,500 for singles and $15,000 for families.5<\/sup><\/p>\n

If you\u2019re enrolled in Medicare or someone claims you as a dependent on their tax return, sorry, you won\u2019t be able to open or contribute to a Health Savings Account.\u00a0<\/p>\n\n\n\n\n\n\n\n
\u00a0<\/td>\n\n

2022<\/strong><\/p>\n<\/td>\n

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2023<\/strong><\/p>\n<\/td>\n<\/tr>\n

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HDHP Minimum Annual Deductible (Individual Coverage)<\/strong><\/p>\n<\/td>\n

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$1,400<\/p>\n<\/td>\n

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$1,500<\/p>\n<\/td>\n<\/tr>\n

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HDHP Minimum Annual Deductible (Family Coverage)<\/strong><\/p>\n<\/td>\n

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$2,800<\/p>\n<\/td>\n

\n

$3,000<\/p>\n<\/td>\n<\/tr>\n

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Out-of-Pocket Maximum (Individual Coverage)<\/strong><\/p>\n<\/td>\n

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$7,050<\/p>\n<\/td>\n

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$7,500<\/p>\n<\/td>\n<\/tr>\n

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Out-of-Pocket Maximum (Family Coverage)<\/strong><\/p>\n<\/td>\n

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$<\/strong>14,100<\/p>\n<\/td>\n

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$15,000<\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

How Does an HSA Work?<\/h2>\n

In most cases, your HSA acts like a savings account at first and earns interest the same way a normal savings account does. Other Health Savings Accounts let you invest the money in mutual funds right away\u2014just like an IRA! Some providers require a minimum balance before you can start investing your HSA funds, so do your research ahead of time.\u00a0<\/p>\n

Investing your HSA funds and letting that money grow over the long haul can help you start building up enough savings to cover medical expenses during your retirement years. That\u2019s huge!<\/p>\n

Your HSA also comes with some great tax advantages:<\/p>\n

1. You\u2019re not taxed when you put money into your HSA account.<\/h3>\n

Generally, there are two ways you can put money into an HSA. Your HSA contributions can come straight out of your paycheck through a pretax payroll deduction, or you could make deposits into your HSA on your own and claim them as tax deductions\u00a0when you do your income taxes.\u00a0<\/p>\n

Either way, you won\u2019t be paying taxes on the money you put into your Health Savings Account!<\/p>\n

2. The money in your HSA also grows tax-free.\u00a0<\/h3>\n

Once that money is in your account and starts earning interest, you won\u2019t be taxed for growth like you might with other types of accounts that earn interest. Whenever you see the words\u00a0tax-free<\/em>\u00a0and\u00a0growth<\/em>\u00a0in the same sentence, your ears should perk up a little bit!\u00a0<\/p>\n

The ability to take advantage of tax-free growth makes the HSA a nice addition to your retirement portfolio. If you\u2019re maxing out your 401(k) and IRA contributions and are looking for another place to invest, your HSA is a great place to start.\u00a0<\/p>\n

3. You\u2019re not taxed when you take money out to pay for medical expenses.<\/h3>\n

As long as you use your HSA money to pay for qualified medical expenses, you won\u2019t be hit with any taxes or penalties.\u00a0<\/p>\n

Another great thing about HSAs:<\/p>\n

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Once you turn 65, your HSA acts like a traditional IRA. At that point, you can take out money for anything you\u2019d like, but you\u2019ll pay taxes on it when you do\u2014just like a traditional IRA.<\/p>\n<\/blockquote>\n

However, you can still pay for medical expenses in retirement from your HSA\u00a0tax-free<\/em>! That makes using a Health Savings Account\u00a0the best option for covering health costs in your golden years. \u00a0\u00a0<\/p>\n

When you combine\u00a0tax-free<\/em>\u00a0contributions with\u00a0tax-free<\/em>\u00a0growth and\u00a0tax-free<\/em>\u00a0withdrawals for medical expenses, that\u2019s like getting a government match on your health care savings!<\/p>\n

What Are Qualified Medical Expenses?<\/h2>\n

Here are just some of the most common\u00a0qualified medical expenses\u00a0you can use your tax-free HSA dollars for:\u00a0<\/p>\n