Pay less in Taxes With this Healthcare Strategy

Examples of medical expenses that HSA funds can be used for include:

• Doctor’s visits, hospital care, and surgeries
• Prescription medications
• Dental and vision care
• Mental health services and therapy
• Chiropractic services and acupuncture
• Medical equipment like bandages, crutches, and blood pressure monitors.

• Recently, Direct Primary Care Subscriptions have been identified as a qualifying medical expense per the Big Beautiful Bill.

As long as it’s a qualified medical expense, as defined by the IRS, you’re in the clear! However, some services are considered a qualifying medical expense only with a formal diagnosis or under the supervision of a Licensed Medical Provider.

To contribute to an HSA, you must:

• Be enrolled in a qualified high-deductible health plan (HDHP),
• Not be enrolled in Medicare,
• Not be claimed as a dependent on someone else’s tax return, and
• Not have other disqualifying health coverage (like a general-purpose FSA or certain types of supplemental insurance).

For 2025, the IRS contribution limits are:

• $4,150 for individuals with self-only HDHP coverage
• $8,300 for individuals with family HDHP coverage

If you’re age 55 or older, you can contribute an additional $1,000 as a catch-up contribution.

HSAs are owned by you, not your employer. The funds remain yours even if you change jobs, retire, or switch to a non-HDHP. You can no longer contribute if you’re not enrolled in a qualified HDHP, but you can still spend existing funds on qualified medical expenses.

Yes, once your HSA balance meets a minimum threshold (often around $1,000–$2,000, depending on your administrator), you can invest funds in mutual funds, ETFs, or other options offered by your HSA custodian. Earnings grow tax-free.

Unlike Flexible Spending Accounts (FSAs), HSA funds roll over from year to year. There is no “use it or lose it” rule. Your balance can continue to grow over time.

At age 65, you can still use HSA funds for qualified medical expenses tax-free. If you use funds for non-medical expenses, you’ll pay regular income tax, but there’s no penalty (the 20% early withdrawal penalty no longer applies after age 65). You can also use your HSA to pay for Medicare premiums (excluding Medigap).

There is no deadline to reimburse yourself from your HSA, as long as:

• The expense was incurred after your HSA was opened, and
• You have documentation (like a receipt or Explanation of Benefits) showing it was a qualified medical expense.

This means you can pay out-of-pocket now and choose to reimburse yourself years later, allowing your HSA balance to grow tax-free in the meantime.

It depends. Generally, no, unless you meet certainly situational qualifications or for specific types of coverage. Below are some examples.

• If you are receiving unemployment benefits, you can use HSA funds to pay for ACA qualified Individual Health Insurance premiums.
• HSA funds can be used to pay for Long Term Care Insurance. Limits may apply based on age you purchase coverage.
• HSA funds can be used to pay for COBRA premiums.
• HSA funds can be used for Medicare after age 65 other than supplemental policies (for example, Medigap).

If you were only enrolled in a Qualified High Deductible Health Plan for part of the year, you can contribute a portion of that years annual limit equal to 1/12 of the limit for each month you were on the QHDHP.

There’s an exception though! That is, if you were enrolled on December 1st of the year in which you want to contribute, you can contribute the full annual limit.