2.3: READ- HSA Health Savings Accounts
HSA like a Pro!
Stretch your dollars further and put more money in your pocket. Health Savings Accounts empower you
to save more, spend smarter and invest in your healthcare.
What is a Health Savings Account?
HSAs are tax-advantaged member-owned accounts that let you save pre-tax¹ dollars for future qualified medical expenses. You can invest in mutual funds tax-free—and funds never expire.
Am I eligible for a Health Savings Account?
HSAs are available exclusively to those with a qualifying health plan.
- You are eligible if you have a High-deductible health plan
- You are not eligible if you have Healthcare coverage beyond qualified health plans (including Medicare enrollment)
- You are not eligible if you are being claimed as a dependent on someone’s tax returns.
- You are not eligible if you are Receiving Veterans Affairs benefits within the past three months
How do I sign up?
You can enroll in an HSA-qualified health plan and sign up for an account during your organization’s annual open enrollment. If you have a high-deductible health plan on your own—not offered through an employer—you can sign up right now.
Save
- Put more money in your pocket.
- Enjoy lower health plan premiums
- Qualified health plans offer lower premiums, enabling you to save potentially thousands every year.
- Keep your premium savings
- Just put the extra money you would’ve paid toward traditional premiums into your account. Voila!
- Long-term savings.
| FSA | HSA | |||
|---|---|---|---|---|
| Traditional health plan | HSA-qualified health plan | |||
| Higher premiums | Lower premiums | |||
| Lower deductibles | Higher deductibles | |||
| Doesn't cover premium payments | Cover premium payments | |||
| Funds expire | Funds don't expire |
Unlike Flexible Spending Accounts (FSA), you own your HSA. That means your entire balance rolls over every year—even if you change health plans, retire, or leave your employer.
HSA vs FSA comparison
The more you contribute, the more you save
Each contribution potentially reduces your annual tax bill. Link a bank account and make tax-deductible contributions anytime.
HSA Annual Contribution Limits
Tax year Individual coverage limit Family coverage limit
2024 $4,150 $8,300
2025 $4,300 $8,550
At age 55, members can contribute an additional $1,000 beyond IRS limits.
Spend
Stretch your dollars further.
HSA qualified medical expenses
Because of the tax savings on contributions, you can save an average of 30 percent on qualified medical expenses, including but not limited to:
- Acne Medicine
- Braces
- Crutches
- Dentures
- Eyeglasses
- Eye Surgery
- Flu Shot
- Hearing Aids
- Motorized Wheelchair
- Prescriptions
- X-Rays
- Allergy Medicines
- Contact Lenses
- Dental Cleanings
- Doctor Fees
- Eye Exams
- Face Masks
- Hand Sanitizer
- Ibuprofen
- Orthodontia
- Sanitizing Wipes
Your Savings Can Add Up Fast
Here’s an example based on $4,000 annual spending and a 30 percent effective tax rate.
Medical expenses
$3,000
+
Vision expenses
$500
+
Dental expenses
$500
Annual tax savings
=
$1,200
Consider generics
Generic medications cost 20 to 70 percent less than branded medications.
Prefer urgent care
Emergency room visits cost up to 5X more than urgent care.⁸ Unless it’s a life-threatening event, consider urgent care instead.
Comparison shop
Whether you need a simple procedure or even major surgery, be sure to get prices from several healthcare providers.
Invest
Build long-term health savings.
HSA investing
Invest your money just like a 401(k)
- Access liquid funds anytime
- Enjoy lower fees and transparent pricing
| 401(k) | HSA |
|---|---|
| FICA taxed contributions | 100% tax deductible contributions |
| Tax-free earnings | Tax-free savings |
| Medical expenses taxed as ordinary income | Tax-free distribution for medical expenses |
| Regular expenses taxed as ordinary income | Regular expenses taxes as ordinary income |
| Minimum distributions required | No required minimum distributions |
HSA vs. 401(k)
Both accounts let you make pre-tax contributions and grow tax-free earnings. But only an HSA lets you take tax-free distributions for qualified medical expenses. After age 65 you can use your health savings account for any expense, you’ll simply pay ordinary income taxes— just like a 401(k).
HealthEquity does not provide legal, tax or financial advice. Always consult a professional when making life-changing decisions.
Source: "HSA like a pro." HSA Guide. HealthEquity.