If you have a high-deductible health plan (HDHP), you may be eligible to open a Health Savings Account (HSA) — a tax-advantaged savings account that can help you manage healthcare costs. Despite the significant benefits HSAs offer, many eligible individuals never take advantage of them. Here’s what you need to know.
What Is an HSA?
A Health Savings Account is a savings account specifically designed for healthcare expenses. Contributions are made pre-tax (or are tax-deductible if made outside of payroll), the money grows tax-free, and withdrawals for qualified medical expenses are not taxed. This triple tax advantage makes HSAs one of the most tax-efficient savings vehicles available.
HSAs are owned by the individual — not by your employer — which means the funds roll over from year to year and go with you if you change jobs or insurance plans.
What Can You Use HSA Funds For?
HSA funds can be used for a wide range of qualified medical expenses, including deductibles and copayments, prescription medications, dental and vision care, mental health services, and many over-the-counter health products. The IRS provides a detailed list of eligible expenses in Publication 502.
After age 65, HSA funds can also be withdrawn for any purpose (not just medical expenses) without penalty, though non-medical withdrawals at that point are subject to regular income tax — making it function similarly to a traditional IRA.
HSA Contribution Limits
The IRS sets annual contribution limits for HSAs, which are adjusted each year. For 2026, the limits are set by the IRS and vary based on whether you have self-only or family HDHP coverage. Your employer may also contribute to your HSA, and those contributions count toward the annual limit.
Is an HDHP + HSA the Right Choice for You?
A high-deductible plan paired with an HSA is often a smart choice for people who are generally healthy, have manageable ongoing healthcare costs, and want to save on premiums while building a healthcare nest egg. However, if you have significant ongoing medical expenses, a plan with a lower deductible and higher premium may result in lower out-of-pocket costs overall.
Comparing total potential costs — premiums plus likely out-of-pocket expenses — across different plan types is the most useful approach to choosing.
Explore Your Health Insurance Options
Guardian Risk Management & Insurance Services can help you compare health insurance options and understand whether an HDHP with an HSA makes sense for your situation. Contact us at (928) 645-6973 or reach out through our website to get started.