An HSA is an account used to save for qualified medical expenses. Eligible contributions can receive favorable tax treatment, earnings in the account are generally not taxed while they remain there, and distributions used for qualified medical expenses are generally tax-free. [1]

The HSA belongs to the account holder. Money you do not spend can remain in the account for future years; it does not have to be used by the end of the year. [1]

Generally, you must be covered by an HSA-eligible high-deductible health plan (HDHP), have no disqualifying other health coverage, not be enrolled in Medicare, and not be claimed as someone else’s dependent. The eligibility rules apply to the person making the contribution, not simply to whether the employer offers an HSA. [1]

A health plan with a high deductible is not automatically HSA-eligible. Check the plan documents or ask the benefits administrator before contributing. A general-purpose health flexible spending account (FSA), including one available through a spouse’s plan, can also affect eligibility. [1]

The annual limit depends on whether you have eligible self-only or family HDHP coverage. For 2026, the basic limits are $4,400 for self-only coverage and $8,750 for family coverage. An eligible individual who is age 55 or older by year-end can generally contribute an additional $1,000. [1, 2]

Employer contributions count toward the applicable limit. If eligibility changes during the year, your permitted contribution may need to be prorated unless a special rule applies. Confirm the limit for the year you are contributing rather than carrying forward a prior year’s amount. [1]

HSA funds can generally be used tax-free for qualified medical expenses of the account holder, their spouse, and eligible dependents, as long as the expense was incurred after the HSA was established and was not reimbursed from another source. Eligible expenses may include deductibles, copays, prescriptions, and many other forms of medical care. [1, 3]

Not every healthcare-related purchase qualifies. Keep receipts and records showing what the expense was, when it occurred, and who incurred it. An expense reimbursed tax-free from an HSA cannot also be claimed as an itemized medical deduction. [1, 3]

Yes, qualified medical expenses for your spouse can generally be paid or reimbursed tax-free from your HSA. Your spouse does not have to own an HSA or be eligible to contribute to one. [1]

For example, one spouse may be enrolled in Medicare and unable to contribute to an HSA, while the other spouse remains HSA-eligible. The eligible spouse may still be able to use their HSA for the Medicare-enrolled spouse’s qualified medical expenses. Contribution eligibility and eligibility for tax-free reimbursement are different questions. [1]

Usually, health insurance premiums are not qualified HSA expenses. There are exceptions, including certain COBRA coverage, coverage while receiving unemployment compensation, qualified long-term care insurance premiums subject to limits, and certain Medicare and other health coverage premiums after age 65. Medigap premiums generally do not qualify for tax-free HSA reimbursement. [1]

Because premium rules have exceptions, identify the exact type of coverage before using HSA funds. Keep the premium statements with your tax records. [1]

Either approach can fit a financial plan. Using the HSA now can ease current cash flow. Paying eligible expenses from other available funds may allow the HSA balance to remain invested for future healthcare needs, but that choice should not strain your emergency reserves or require you to take unsuitable investment risk.

Some HSAs offer investment options once the cash balance reaches a specified level. Review fees, investment choices, and when you expect to use the money before deciding how much to invest. An invested HSA balance can lose value.

Generally, yes. The IRS does not impose a specific deadline for taking an HSA distribution to reimburse an eligible expense incurred after the HSA was established. You must be able to document the expense and show that it was not previously reimbursed or deducted. [4]

This makes recordkeeping essential. Save the dated receipt, proof of payment, and information showing the service was eligible. Without adequate records, a later distribution may be difficult to substantiate as tax-free. [4]

A nonqualified distribution is generally included in taxable income. If you are under age 65, it is generally also subject to an additional 20% tax, unless an exception applies. Once you reach age 65, the additional 20% tax generally no longer applies, but a nonqualified distribution remains taxable income. [1]

This flexibility after age 65 does not make an HSA the same as a traditional retirement account. Withdrawals for qualified medical expenses can still receive different tax treatment from withdrawals for other spending. [1]

You can keep your existing HSA and use its funds for qualified expenses. However, beginning with the first month you are enrolled in Medicare, your HSA contribution limit is zero. That includes both employee and employer contributions for months of Medicare enrollment. [1]

Medicare Part A coverage may begin retroactively when you enroll after age 65 or apply for Social Security benefits. Contributions made during months later covered retroactively by Medicare can become excess contributions. Coordinate the final contribution date with your benefits administrator and tax professional before applying. [1, 5]

Possibly. HSA contribution eligibility is determined separately for each spouse. A younger spouse who has HSA-eligible HDHP coverage and meets the other requirements may contribute to their own HSA even though the older spouse is enrolled in Medicare. The Medicare-enrolled spouse cannot contribute to their own HSA for months of Medicare coverage. [1]

The younger spouse’s limit depends on the type of eligible HDHP coverage and the applicable married-couple rules. Do not assume that the older spouse’s Medicare enrollment automatically ends the younger spouse’s eligibility—or that it automatically gives the younger spouse the family contribution limit. Check the actual health coverage. [1]

Your HSA remains yours when you change employers or health coverage. You can generally continue using its existing balance for qualified expenses even if you are no longer eligible to make new contributions. [1]

Before changing your contribution election, verify whether the new health plan is HSA-eligible, when coverage begins, whether another FSA or HRA affects eligibility, and what your combined employee and employer contributions will be for the year. If you have multiple HSAs, the annual contribution limit is not multiplied by the number of accounts. [1]