HSAs or Health Savings Accounts provide a powerful triple tax benefit — on contributions, growth, and withdrawals — but they remain a woefully underused retirement tool.
They are so underutilized that Fidelity Investments found that one in two Americans is unfamiliar with the HSA and its triple tax benefits. There’s even a National HSA Awareness Day, which falls on October 15 each year, to spread the word about the benefits of this tax-advantaged savings tool.
“It’s drastically underutilized,” says Jessica Nino, a financial advisor at Edward Jones. “Anyone currently not on Medicare on a high deductible qualifying plan can have one.”
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What is an HSA?
With an HSA, you contribute tax-free dollars up to a limit to be used for qualifying health care expenses. The money in your HSA grows tax-free, and withdrawals for those health care expenses are tax-free. There is no use-it–or-lose-it rule attached to an HSA.
For 2025, the contribution limit is $4,300 for self-only coverage and $8,550 for family coverage. If you are 55 or older, you can contribute an additional $1,000. An HSA is only available with a high deductible health plan, which means a deductible of $1,650 for a single person and $3,300 for a family. Once you turn 65 and go on Medicare, you can no longer contribute to an HSA.
In 2026, contributions increase to $4,400 for self-only coverage and $8,750 for family coverage. The 55+ catch-up is unchanged. The deductible increases to $1,700 for a single person and $3,400 for a family.
How to get an HSA
If your employer offers an HSA, you can typically sign up during open enrollment and have contributions deducted from your paycheck automatically. The money will come out of your paycheck on a pre-tax basis. Some employers will even match your contributions to a certain limit.
If your employer doesn’t offer an HSA, you can still open one directly through many banks, credit unions, and investment firms. In this case, you would contribute funds straight from your bank account. However, it’s important to do your own research and/or discuss it with a trusted financial adviser before opening an account.
If you have private health insurance, you can either select a financial institution on your own or one of the HSA providers that the health insurer teams up with. The process is the same otherwise.
Boost your HSA with these moves
Now that you know the benefits of an HSA, Nino says there are some moves you can make to get the most out of having one. After all, the money you’re saving in your HSA isn’t just sitting there. It is being invested and growing and compounding and hopefully becoming a nice nest egg.
1. Let the money grow over time. Assuming you are contributing the maximum and taking advantage of catch-up contributions, Nino says one HSA balance boosting move is an easy one: don’t use it.
“If you can pay for your current health care costs, that will then allow you to have options,” she says. “You can invest the HSA dollars and grow them tax deferred, like a Roth IRA, and then in retirement pull money out for medical expenses tax-free.”
While an HSA is not likely to cover all your health care needs in retirement — Fidelity estimates an average of $174,500 in out-of-pocket costs — it can help.
2. Pay yourself back for past medical expenses. Another strategy, aimed at pulling money out of the HSA tax-free, is to use past medical expenses to justify current withdrawals in retirement. For instance, if you pay all your qualified medical expenses out-of-pocket from your mid-50s until age 65 (when Medicare kicks in) and save every receipt, you can then withdraw all of that money tax-free from your HSA — as long as you have the corresponding documentation.
“There’s no time limit for you to pull out the dollars,” says Nino. Remember, if you use the money for non-qualifying health care expenses, you’ll pay taxes on the withdrawals.
If you got it, take advantage of it
HSAs are a tax-advantaged way to save for health care expenses now and into the future. Whether you can contribute the maximum amount allowed by law, or only a small amount, HSAs can help you cover the burden if you get sick.
The above tips can help you take advantage of something that already gives you a triple tax benefit–you can’t say that of many other savings products available to everyday investors.