Health Savings Account (HSA)

A savings account built for health costs

A health savings account, or HSA, is an account you own and control. You put money in, invest it if you choose, and spend it on qualified medical expenses like deductibles, copays, prescriptions, dental work and vision care. Unused money rolls over every year and stays with you even if you change plans, switch jobs or retire.

To contribute, you must be covered by an HSA-eligible health plan and have no other disqualifying coverage.

2027 contribution limits

• Self-only coverage: $4,500.
• Family coverage: $9,000.
• Catch-up at 55 or older: an extra $1,000.

If both spouses are 55 or older, each needs their own HSA for both catch-up amounts.

Bigger change: bronze and catastrophic plans qualify

Starting in 2026, all bronze and catastrophic individual plans are HSA-eligible. Before that, only plans meeting strict high-deductible design rules qualified, and many Marketplace bronze plans did not. That opens HSAs to far more self-employed people and families who buy their own coverage.

Example

Rachel, 56, is a self-employed accountant with a bronze plan for 2027. She contributes $5,500 to her HSA, the $4,500 self-only limit plus the $1,000 catch-up.

• She pays for a dermatology visit and a prescription from the account.
• At year-end she has $3,800 left, which rolls over and is invested.
• By the time she reaches Medicare age, she has a meaningful balance for future medical costs.

The tax treatment

HSAs are often described as having a triple tax advantage: contributions may be deductible, growth is not taxed, and withdrawals for qualified medical expenses are not taxed. Contributions can also lower your modified adjusted gross income, which can matter for people close to the premium tax credit cutoff. Withdrawals for non-medical purposes before 65 generally face taxes and a penalty.

Marketplace vs private plans

Bronze and catastrophic Marketplace plans now qualify, along with other plans built to HSA rules, on or off the exchange. Many private underwritten plans are not HSA-eligible because of how their benefits are structured, so ask before assuming. If building an HSA balance is part of your plan, that may tip the decision toward an eligible plan.

Common mistakes

• Contributing while also enrolled in a non-qualifying plan or a general-purpose FSA.
• Contributing after enrolling in Medicare.
• Not keeping receipts for withdrawals.

Read our HSA health insurance guide and LLC owner health insurance guide for planning ideas. To compare HSA-eligible plans, request a quote.

General information, not tax advice — confirm with your CPA based on your specific entity structure.