Health savings accounts (HSAs) provide a great option for consumers to make healthcare more affordable, especially as healthcare costs in the U.S. continue to rise. We know enrolling in an HSA can be intimidating. However, the better consumers understand HSAs, the more likely employers are to offer them, which allows benefit administrators to take advantage of the fastest growing segment of the consumer funding space.

Below, we describe a few common mistakes that people make when considering or enrolling in an HSA and counter those with smart ways to optimize a tax-advantaged savings account.

You don’t need disposable income to invest in an HSA. In fact, many consumers contribute the dollar amount they think they will spend on out-of-pocket healthcare costs in the coming year, at least up to their health plan’s deductible. This allows them to reach their deductible with tax-free dollars, meaning their spendable income stretches by an average of 30% further!

A common mistake that workers make is declining to participate in an HSA under the assumption that HSAs only exist as a tax shelter for the wealthy or as a low-cost health insurance alternative for young and healthy individuals. In actuality, these plans and accounts support a diverse group of participants who have middle-class incomes, families and even chronic conditions.

Understanding which health-related expenses are eligible for HSA reimbursement is important. Cosmetic services, elective surgeries and gym memberships are a few examples of ineligible expenses. Over-the-counter prescriptions are only eligible expenses when a doctor has specifically written a prescription for them. Be sure to review your HSA’s policies prior to using your account to verify whether an expense is eligible.

If you pay for ineligible expenses with your HSA, you could face a 20% fine. Any time you use your HSA card, keep the receipt so you can prove it was for a qualified medical expense.

Another common mistake is confusing an HSA with a flexible spending account (FSA). Unlike an FSA, the money you contribute into your HSA does not need to be used during the same year. The money in your HSA will accrue year-over-year, with no limit on how much can roll over. The big differentiator is that an HSA acts more like a savings account, where you can keep money with no penalties, and even leave it to your dependents in your will.

A key factor to consider is that under current IRS regulations, if you have an HSA, then the only FSA you are allowed to use is a limited purpose FSA, or the FSA can only be used for dental and vision expenses.

Did you know that you can contribute too much into your HSA? Each year, the IRS updates the maximum contribution limit that an account holder can add to their HSA for the year. If you put in too much and don’t remove the excess funds before April 15 of the tax year, you will pay a 6% fine.

If you would like to learn more about optimizing your HSA, here are common HSA questions — answered.