Quick answer
A health savings account (HSA) is a savings account for medical costs that you can open if you have an HSA-eligible health plan. Money goes in tax-free, grows tax-free and comes out tax-free when you spend it on qualified medical expenses. For 2026 you can put in up to $4,400 for self-only coverage or $8,750 for family coverage, rising to $4,500 and $9,000 in 2027.
Key takeaways
- You need an HSA-eligible plan: a qualifying high-deductible plan or, since 2026, a bronze or catastrophic plan from the marketplace.
- Contributions are pre-tax through payroll or tax-deductible, and withdrawals for medical costs are tax-free.
- The money is yours. It rolls over every year and stays with you if you change jobs or plans.
- People 55 and older can add $1,000 a year on top of the regular limit.
- Money spent on non-medical costs is taxed and, before 65, hit with a 20% penalty.
On this page
How an HSA works
You open an HSA through your employer or a bank or brokerage that offers them, and you or your employer put money in. You can pay for care with an HSA debit card at the doctor’s office or pharmacy, or pay out of pocket and reimburse yourself later, as long as you keep receipts.
HSAs have three tax breaks:
- Contributions lower your taxable income. Payroll contributions come out of your paycheck before income and payroll taxes, and money you put in yourself is deductible.
- Interest and investment earnings grow tax-free.
- Withdrawals for qualified medical expenses are tax-free.
Unused money never expires. Many people invest part of their HSA and let it grow for costs in retirement.
Who can open one
You can contribute to an HSA for any month you:
- Are covered by an HSA-eligible plan
- Don’t have other disqualifying coverage, such as a regular health FSA or a spouse’s non-HSA plan that covers you
- Aren’t enrolled in Medicare
- Can’t be claimed as a dependent on someone else’s tax return
A plan qualifies if it’s a high-deductible health plan under IRS rules. Since January 2026, bronze and catastrophic plans from the marketplace also qualify under the 2025 tax law. Is it better to have a high or low deductible can help you decide whether one fits you.
| IRS limits | 2026 | 2027 |
|---|---|---|
| HSA contribution, self-only coverage | $4,400 | $4,500 |
| HSA contribution, family coverage | $8,750 | $9,000 |
| Catch-up contribution, age 55+ | $1,000 | $1,000 |
| Minimum deductible for a high-deductible plan, self-only / family | $1,700 / $3,400 | $1,750 / $3,500 |
| Maximum out-of-pocket for a high-deductible plan, self-only / family | $8,500 / $17,000 | $8,700 / $17,400 |
The 2025 law also made some changes that make HSAs easier to use. High-deductible plans can permanently cover telehealth before the deductible, and you can pay for a direct primary care membership with HSA money.
What you can spend it on
Qualified medical expenses include:
- Deductibles, copays and coinsurance, including the costs you pay while meeting your deductible
- Prescription drugs
- Dental care and vision care, including glasses and contacts
- Therapy and mental health care
- Hearing aids, medical equipment and many over-the-counter medicines
You generally can’t use it for insurance premiums, with a few exceptions such as COBRA, long-term care insurance, coverage while you’re getting unemployment benefits, and Medicare premiums after 65.
Rules to know
- Non-medical withdrawals are taxed as income, plus a 20% penalty if you’re under 65. After 65, you pay income tax but no penalty.
- Keep receipts. You have to show a withdrawal was for a qualified expense if the IRS asks.
- State taxes. A couple of states, including California and New Jersey, don’t give HSAs the same tax break on state returns.
- Fees. Some HSA providers charge monthly or investment fees, so compare before you open one.
For the tax details, see is health insurance tax deductible.
HSA vs. FSA
| HSA | Health FSA | |
|---|---|---|
| Who offers it | You can open one if you have an HSA-eligible plan | Only through an employer |
| Rolls over | Yes, all of it | Limited, depending on the plan |
| Stays with you if you leave your job | Yes | No |
| Can be invested | Usually | No |
Is an HSA worth it?
An HSA works best if you can afford to save for your deductible and you’re fairly healthy, or if you want tax-free savings for health costs later in life. It’s a harder fit if you expect big medical bills this year and can’t set money aside.
Compare the total cost of a high-deductible plan plus HSA with a plan that has a lower deductible. For single shoppers, how much health insurance costs per month can help, and health insurance coverage types explains the other kinds of plans.
Related guides: working past 65 and your HSA and health insurance for a 50-year-old.
See which plans near you are HSA-eligible: compare quotes by ZIP code.
Frequently asked questions
Can I have an HSA with a bronze plan?
Yes. Since January 2026, bronze and catastrophic plans from the marketplace count as HSA-eligible.
What happens to my HSA if I switch to a plan that isn’t HSA-eligible?
You keep the account and can still spend the money tax-free on medical costs. You just can’t add more until you’re on an eligible plan again.
Can I use my HSA for my family’s medical bills?
Yes, for your spouse and tax dependents, even if they aren’t on your health plan.
What happens to an HSA when I turn 65?
You can’t contribute once you enroll in Medicare, but you can keep spending the balance tax-free on medical costs, including Medicare premiums. Non-medical withdrawals after 65 are taxed like income but not penalized.
Sources
This article is general information, not tax or insurance advice. HSA rules can be complex, so check IRS Publication 969 or ask a tax professional about your situation. Last reviewed September 2026.