Health Savings Accounts (HSAs) offer triple tax advantages that can save you thousands in healthcare costs and build retirement wealth. This guide covers 2025 contribution limits, investment strategies, and the best HSA providers.
Triple Tax Advantage
- Tax-deductible contributions: Reduce your taxable income
- Tax-free growth: Investments grow without taxes
- Tax-free withdrawals: For qualified medical expenses
No other account offers all three tax benefits!
2025 HSA Contribution Limits
| Coverage Type | 2025 Limit | 2024 Limit | Change |
|---|---|---|---|
| Self-Only Coverage | $4,300 | $4,150 | +$150 |
| Family Coverage | $8,550 | $8,300 | +$250 |
| Catch-Up (55+) | +$1,000 | +$1,000 | Same |
HSA Eligibility Requirements
REQUIREMENTS
You Must Have:
- High-deductible health plan (HDHP)
- 2025 HDHP minimums: $1,650 (self) / $3,300 (family)
- No other health coverage (some exceptions)
- Not enrolled in Medicare
- Not claimed as a dependent
Best HSA Providers 2025
| Provider | Monthly Fee | Investment Options | Best For |
|---|---|---|---|
| Fidelity | $0 | Excellent (stocks, ETFs, funds) | Investing, no fees |
| Lively | $0 | Good (TD Ameritrade) | User experience |
| HSA Bank | $2.50-4.50 | Good | Employer plans |
| HealthEquity | Varies | Good | Integration options |
| Optum Bank | $2.75 | Limited | UHC integration |
Top Pick: Fidelity HSA
Why it's best:
- Zero monthly fees or minimums
- No investment threshold - invest from $1
- Full Fidelity investment options
- Excellent customer service
- Free debit card for expenses
HSA vs FSA Comparison
| Feature | HSA | FSA |
|---|---|---|
| Rollover | Yes, unlimited | Limited ($640) or none |
| Portability | Yes, you own it | No, employer owns it |
| Investment | Yes | No |
| HDHP required | Yes | No |
| 2025 Limit (family) | $8,550 | $3,200 |
| Contribution changes | Anytime | Open enrollment only |
HSA Investing Strategy
The Optimal HSA Strategy
- Max out contributions: Get the full tax deduction
- Don't use HSA for current expenses: Pay out-of-pocket if possible
- Invest 100% of HSA funds: In low-cost index funds
- Save medical receipts: Reimburse yourself years later, tax-free
- Let it grow: Use as stealth retirement account
Recommended Investment Allocation
- Short-term (need money soon): Keep in cash/savings
- Medium-term (5-10 years): 60% stocks, 40% bonds
- Long-term (10+ years): 80-90% stocks, 10-20% bonds
Qualified Medical Expenses
Common Qualified Expenses
- Doctor visits and copays
- Prescription medications
- Dental and vision care
- Mental health services
- Medical equipment (crutches, wheelchair)
- Sunscreen (SPF 15+)
- First aid supplies
- Feminine care products
- Contact lenses and glasses
- LASIK and other procedures
NOT Qualified (Without Prescription)
- Cosmetic procedures
- Gym memberships
- General wellness products
- Insurance premiums (some exceptions)
HSA as Retirement Account
After Age 65
- Withdrawals for any purpose (taxed like traditional IRA)
- Medical withdrawals still tax-free
- Medicare premiums are qualified expenses
- Long-term care insurance premiums qualify
Pro tip: Keep all medical receipts. You can reimburse yourself for past expenses years later, tax-free, even after 65.
Common HSA Mistakes
- Not maxing contributions: Missing free tax savings
- Leaving money in cash: Inflation erodes value
- Using for current expenses: Miss out on tax-free growth
- Not keeping receipts: Can't reimburse later
- Losing HSA when changing jobs: It's your account, take it with you!
- Paying investment fees: Switch to Fidelity for $0 fees
HSA Tax Benefits Example
Annual Savings
Family contributing $8,550 at 32% marginal tax rate:
- Federal tax savings: $2,736
- State tax savings (5%): $428
- FICA savings (7.65%): $654
- Total annual tax savings: $3,818
Over 20 years with 7% growth and continued contributions: $500,000+ in tax-advantaged wealth