A health savings account (HSA) is a powerful tool that allows you to set aside pre-tax money for healthcare expenses. Whether you want to save, invest, or spend on out-of-pocket medical costs not covered by insurance, an HSA gives you more control over your healthcare finances.

To open an HSA, you need to be enrolled in a high-deductible health plan (HDHP) through your employer. Once enrolled, you can contribute pre-tax dollars up to an annual limit set by the government. Because HDHPs typically come with lower monthly premiums, you can put some or all of those savings directly into your HSA. Your employer may even chip in with contributions, a practice known as employer seeding.

With your HSA funds, you can:

• Pay for eligible out-of-pocket healthcare expenses not covered by your insurance
• Save money for future medical expenses
• Invest your funds for growth (once your balance reaches the minimum amount set by your HSA provider)

Healthcare costs are rising, and an HSA can help you manage those expenses while offering a triple tax advantage:

• Tax-deductible contributions – Lower your taxable income by contributing pre-tax dollars.
• Tax-free growth – Any funds in your HSA grow tax-free.
• Tax-free withdrawals – As long as you use the money for qualified medical expenses, you won’t pay taxes when you withdraw it.

Using pre-tax money for medical costs can save you up to 30% on out-of-pocket expenses! Plus, unlike flexible spending accounts (FSAs), HSA funds never expire — so anything you don’t use will roll over year after year.

HSAs aren’t just helpful for current medical expenses; they can also play a big role in your long-term financial health. Think of an HSA like a 401(k) for healthcare — it allows you to build up savings for medical costs in retirement. But unlike a 401(k), you can access your HSA funds at any time, as long as you’re using them for qualified medical expenses. This makes an HSA an excellent safety net for unexpected healthcare needs.

Your HSA funds can cover a wide range of out-of-pocket medical expenses, including:

• Doctor’s visits, treatments, and diagnostic tests
• Lab fees and medical devices
• Vision, dental care, and prescription medications
• Your deductible for an HDHP

You can even shop online for HSA-eligible products at sites like shopwealthcare.com.

HSAs are flexible, but there are a few key rules:

• Your HSA must be paired with an HSA-eligible HDHP.
• Funds must be used for eligible out-of-pocket medical expenses.
• You can only contribute up to a government-set limit each year. Check the latest IRS limits here.

An HSA is a great way to save money, manage healthcare costs, and even plan for the future. Whether you’re covering today’s expenses or preparing for tomorrow’s medical needs, an HSA gives you more control and financial flexibility — and it’s never too early (or too late!) to start taking advantage of one.