What Is a Health Savings Account (HSA)?
An HSA is a tax-advantaged savings account designed to help individuals and families pay for qualified medical expenses. It works alongside a High-Deductible Health Plan (HDHP) and follows IRS rules under Section 223 of the Internal Revenue Code. Unlike Flexible Spending Accounts, HSA funds are yours indefinitely: they never expire, they roll over year to year, they accrue interest or investment gains, and they travel with you between jobs and insurers. The account offers a rare triple tax advantage: contributions reduce your taxable income, growth inside the account is untaxed, and withdrawals for eligible medical costs are tax-free.
Who Is Eligible for an HSA?
To qualify, you must be enrolled in a qualifying HDHP, not enrolled in Medicare, not claimed as a dependent on someone else's tax return, and free of other disqualifying coverage such as a general-purpose FSA. For 2025 to 2026, a qualifying HDHP has a minimum deductible of $1,650 for individual coverage or $3,300 for a family, with out-of-pocket maximums no higher than $8,300 (individual) or $16,600 (family).
HSA Contribution Limits
For 2026, individuals may contribute up to $4,300 per year and families up to $8,550. Those age 55 or older can add a $1,000 catch-up contribution. Contributions can come from you, your employer, or both, as long as the combined total stays within the annual limit; employer contributions are excluded from your gross income.
What Can You Pay for with an HSA?
The IRS defines eligible expenses broadly under Publication 502. Covered costs include deductibles, copays, coinsurance, doctor and specialist visits, surgery, hospital stays, lab work, imaging, and preventive screenings such as mammograms, cholesterol panels, well-woman exams, and Pap smears. Prescriptions, over-the-counter medications (since 2020), insulin and diabetic supplies, and menstrual care products all qualify.
HSAs also cover mental health services (psychiatry, therapy, counseling, substance use treatment), chronic disease tools like glucose and blood pressure monitors, CPAP machines, inhalers, and hearing aids, plus dental and vision care including cleanings, orthodontics, glasses, contacts, and LASIK. Women's health services such as hormone replacement therapy, menopause and perimenopause care, prenatal and maternity expenses, and infertility treatment are eligible. When a physician prescribes weight loss treatment for a diagnosed condition like obesity or insulin resistance, supervised programs, GLP-1 medications, and nutritional counseling may also qualify.
What Cannot Be Paid with an HSA?
Non-qualifying expenses include cosmetic surgery without medical necessity, general gym memberships (unless physician-prescribed), teeth whitening, wellness vitamins and supplements, and most health insurance premiums. Using HSA funds for ineligible costs triggers income tax plus a 20% penalty before age 65.
2026 Update: HSA Funds Can Now Be Used for Direct Primary Care
Effective January 1, 2026, under the One Big Beautiful Bill Act, eligible patients may use HSA funds for Direct Primary Care (DPC) memberships. To preserve HSA contribution eligibility, monthly fees must not exceed $150 for individuals or $300 for families. DPC operates outside traditional insurance: one flat monthly fee covers unlimited primary care with no copays, deductibles, or surprise bills. At Sina Medical Direct Primary Care, individual memberships start at $90 per month, well within the HSA threshold, and include unlimited same-day visits, 24/7 provider access, chronic disease management, women's health services, weight loss programs, and labs and medications at up to 90% off retail. This means your entire primary care relationship can be funded with pre-tax dollars starting in 2026.
How to Get the Most from Your HSA
A few strategies stretch the account's value. Keep all receipts and Explanation of Benefits statements, since the IRS may audit withdrawals. Once your balance clears your provider's threshold, invest it for tax-free long-term growth. If you can, pay small expenses out of pocket and let the account accumulate for larger future or retirement costs. After age 65, HSA funds can pay Medicare Part B and Part D premiums tax-free. Pairing your HSA with a DPC membership eliminates per-visit costs and stretches your tax-free savings even further.
Frequently Asked Questions
You can open an HSA without employer-sponsored insurance as long as you have a qualifying HDHP, which makes HSAs popular among the self-employed. Unused funds never expire and roll over indefinitely, unlike an FSA. You can use HSA money tax-free for a spouse or dependents on your tax return, even if they are not on your HDHP. If you lose HDHP eligibility you can no longer contribute, but your existing balance remains yours for tax-free medical spending. And starting January 1, 2026, Sina Medical Direct Primary Care's $90-per-month membership falls within the IRS threshold for HSA-eligible Direct Primary Care; always confirm eligibility with your HSA administrator or a tax professional.
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