HSA (Health Savings Account)
Definition
A tax-advantaged savings account available to individuals enrolled in a high-deductible health plan (HDHP), offering triple tax benefits for qualified medical expenses.
An HSA offers a unique triple tax advantage that no other account type matches: contributions are tax-deductible, growth is tax-free, and withdrawals for qualified medical expenses are tax-free. This makes it one of the most powerful savings vehicles in the tax code.
For 2025, contribution limits are $4,300 for individuals and $8,550 for families, with an additional $1,000 catch-up contribution for those 55 and older. To be eligible, you must be enrolled in a qualified high-deductible health plan (HDHP).
The secret power of HSAs is that they can function as a stealth retirement account. Unlike FSAs, HSA funds roll over indefinitely — there's no "use it or lose it" rule. Many savvy investors pay current medical expenses out of pocket, invest their HSA in index funds, and let it grow tax-free for decades.
After age 65, HSA withdrawals for any purpose (not just medical) are taxed like regular income — similar to a traditional IRA. But withdrawals for medical expenses remain tax-free at any age, making the HSA strictly better than a traditional IRA for healthcare costs in retirement.
Tracking your HSA balance alongside other investment accounts in Clarity gives you a complete picture of your retirement readiness.
Where this appears in Clarity
Clarity automatically tracks and calculates these concepts across your connected accounts.
Related Terms
Frequently Asked Questions
Can I invest my HSA money in stocks?
Yes, most HSA providers offer investment options once your balance exceeds a minimum threshold (typically $1,000-$2,000 in cash). You can invest in mutual funds, ETFs, and sometimes individual stocks. The investment gains grow completely tax-free.
What's the difference between an HSA and an FSA?
HSAs roll over indefinitely, are portable between jobs, and can be invested. FSAs have a 'use it or lose it' rule (with a small rollover allowance), are tied to your employer, and cannot be invested. HSAs require an HDHP; FSAs don't.