Health Savings Account (HSA)

HSAs are the only triple tax-advantaged account in the tax code.

Triple Tax Benefit

1. Tax-deductible contributions (above-the-line, reduces AGI)
2. Tax-free growth (interest, dividends, capital gains)
3. Tax-free withdrawals for qualified medical expenses

2025 Contribution Limits

HSA as a Retirement Account

After age 65, non-medical withdrawals are taxed as ordinary income (like a Traditional IRA) but with no penalty. This makes the HSA a powerful supplemental retirement account:

Optimal strategy:

1. Contribute the maximum each year
2. Pay medical expenses out-of-pocket (keep receipts!)
3. Invest the HSA balance for long-term growth
4. Reimburse yourself for past medical expenses at any point in the future (no time limit)

Requirements

• Must be enrolled in a High-Deductible Health Plan (HDHP)
• 2025 HDHP minimum deductible: $1,650 (self) / $3,300 (family)
• Cannot be enrolled in Medicare
• Cannot be claimed as a dependent

Bonus: If contributed via payroll deduction, HSA contributions also avoid FICA taxes — unlike 401(k) contributions.

Sources

• IRS Revenue Procedure 2024-25 (2025 HSA Limits)
• IRS Publication 969 – Health Savings Accounts
• IRS: HSA FAQs