HSA (health savings account)
An HSA (health savings account) is an account you own for paying qualified medical expenses with federal tax advantages. To contribute, you generally need coverage under a high-deductible health plan and no other disqualifying health coverage.
By Beacon · Updated
How it works
For 2026, the contribution limit is $4,400 with self-only coverage or $8,750 with family coverage, plus an extra $1,000 if you are 55 or older. Eligibility is checked month by month: you generally need high-deductible coverage on the first day of the month, no other disqualifying coverage, no Medicare enrollment, and no one able to claim you as a dependent. Starting in 2026, certain bronze and catastrophic plans also count as HSA-compatible. For 2027, the limits rise to $4,500 for self-only coverage and $9,000 for family coverage.
Under federal tax rules, your own contributions can be deducted without itemizing, and contributions from an employer can be left out of your income. Interest and investment growth inside the account are not taxed, and withdrawals for qualified medical expenses are tax free. Money taken out for other purposes is generally taxable and may face an additional 20% tax, with exceptions such as withdrawals after age 65.
Unused money carries over from year to year, and because the account belongs to you, it goes with you when you change jobs or stop working. Contributions do not have to be spent in the year they are made. Account fees and investment choices can differ by provider and are worth comparing, and investing money you may soon need for a medical bill carries the risk of losses.
Related terms
Sources and further reading
- IRS: Publication 969 — HSAs and other tax-favored health plans
- IRS: Expanded HSA eligibility guidance for 2026
Examples are illustrative and focus on U.S. personal finance. This page is educational, not individual financial, investment, tax, or legal advice. Read our editorial approach or report a correction.