Maximize my Health Savings Account

Eligibility: To open an HSA, you must be enrolled in a high-deductible health plan (HDHP). For 2025, an HDHP is defined as a plan with a minimum deductible of $1,650 for individual coverage or $3,300 for family coverage. Additionally, you must not have any disqualifying health coverage, such as Medicare, or be claimed as a dependent on someone else’s tax return.

Contribution limits: In 2025, you can contribute up to $4,300 as an individual or $8,550 as a family. Those 55 and older can contribute an additional $1,000.

Tax advantages: Contributions are tax-deductible, earnings grow tax-free, and distribution for qualified medical expenses are tax-free.

Contribute through your employer: Take advantage of pre-tax payroll deductions to reduce your taxable income and maximize your savings.

Leverage employer contributions: Many employers contribute to employees’ HSAs—don’t leave this free money on the table. Learn how much you need to contribute to get a full employer match, if available.

Make contributions post-tax: If payroll contributions aren’t available, you can contribute directly to your HSA and claim a deduction on your tax return.

Review and update your contribution amounts frequently: Adjust your contribution amounts throughout the year without needing a qualifying life event, allowing you to adapt to changes in income or expenses.

Consider contributing the maximum amount: Maximize your contributions to take full advantage of the annual limits and the HSA’s triple tax benefits.

Review your contributions before filing taxes: Make last-minute contributions before the tax-filing deadline (typically April 15) to count toward the prior tax year to lower your taxable income.

Plan for catch-up contributions: If you’re 55 or older, contribute an extra $1,000 annually to boost your healthcare savings.

Investment options: We offer the ability to invest your HSA funds once your account balance reaches a certain threshold.

Long-term growth: Investing can allow for your HSA balance to potentially grow, tax-free, making it a powerful tool for future healthcare expenses or retirement.

Diversify your portfolio: Use your HSA to complement your overall investment strategy, balancing risk and reward.

Prioritize high-cost expenses: Use your HSA for significant medical expenses like surgeries or hospital stays to get the most tax-free benefit.

If you don’t have enough in your HSA to cover an expense now: Consider setting up a payment plan with your provider and having them charge your HSA card for monthly payments, ensuring that you have updated your contributions to cover the monthly payments.

Pay small expenses out-of-pocket: Preserve your HSA growth potential by paying smaller expenses with cash or credit and reimbursing yourself later.

There is no deadline for reimbursing yourself from your HSA: Any expense that you incur after your HSA was opened is eligible. Create a claim and enter your documentation so it is available to you when you are ready to request a reimbursement. This allows you to grow your HSA until you need the funds.

Plan for life changes: Use your HSA to cover costs like childbirth and save up for your healthcare needs in retirement.

Get the tax benefits of your HSA: Pay for over-the-counter medications and home health tools using your HSA funds that you may already be paying for out-of-pocket.

Penalty-free distributions After 65: Once you turn 65, you can distribute funds for non-medical expenses without penalty (though they’ll be taxed as income).

Cover Medicare premiums: Use your HSA to pay for Medicare Part B, Part D, and Medicare Advantage premiums.

Save for long-term care: HSA funds can cover long-term care premiums and related expenses tax-free.

Wait until retirement to reimburse yourself: You can delay reimbursing yourself for qualified medical expenses incurred during your working years and let your HSA grow tax-free. In retirement, you can distribute funds tax-free for those expenses and still use the remaining balance for other purposes.

Exceeding contribution limits: Over-contributing can result in a 6% excise tax. Stay within Internal Revenue Service (IRS) limits to avoid penalties. Make corrections before you file your tax return to avoid these penalties.

Non-qualified withdrawals: Using your HSA for non-qualified medical expenses before 65 can cause both paying taxes on the non-qualified spending and a 20% penalty.

Tax-free contributions: Contributions reduce your taxable income by avoiding FICA tax. For example, a $4,000 contribution in the 22% tax bracket saves $880 in taxes.

Tax-free growth: Any interest, dividends, or investment gains within the account grow tax-free.

Tax-free distributions: Use your HSA for qualified medical expenses without paying taxes on distributions.

State-level considerations: Most states align with federal tax rules, but some (e.g., California, New Jersey) tax HSA earnings.

Reimbursement flexibility: Save receipts for years and withdraw funds tax-free later when needed.

Combine with other accounts: Pair your HSA with a Limited Purpose FSA for dental and vision expenses.

Employer wellness programs: Participate in wellness activities to earn additional HSA contributions.