HSA (Health Savings Account)
A tax-advantaged savings account for medical expenses, available only with high-deductible health plans.
What You Need to Know
An HSA is the most tax-advantaged account in existence—better than 401(k)s and IRAs. It offers triple tax benefits:
- Tax deduction on contributions
- Tax-free growth
- Tax-free withdrawals for medical expenses
2025 Contribution Limits:
- Individual: $4,300
- Family: $8,550
- Age 55+: Extra $1,000 catch-up
Pro Strategy: Max out HSA contributions, pay medical bills out-of-pocket, and let the HSA grow as a retirement account. Medical expenses are huge in retirement, and HSA withdrawals for healthcare are always tax-free. After age 65, you can withdraw for any reason (taxed like traditional IRA).
Requirement: You must have a high-deductible health plan (HDHP) to contribute.
Sources & References
This information is sourced from authoritative government and academic institutions:
- healthcare.gov
https://www.healthcare.gov/high-deductible-health-plan/hsa/
- irs.gov
https://www.irs.gov/publications/p969
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