HSA (Health Savings Account)
A tax-advantaged savings account for individuals with high-deductible health plans to pay for medical expenses.
Definition
A Health Savings Account (HSA) is a tax-advantaged savings account available to individuals enrolled in a High-Deductible Health Plan (HDHP). HSAs offer a triple tax advantage: contributions are tax-deductible, earnings grow tax-free, and withdrawals for qualified medical expenses are tax-free. 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+. Unlike FSAs, HSA funds roll over year to year and the account is portable. After age 65, HSA funds can be withdrawn for any purpose (taxed as income, like a Traditional IRA) without penalty. Many financial planners consider HSAs the most tax-efficient retirement savings vehicle available.
Related Terms
401(k)
An employer-sponsored retirement savings plan with tax advantages.
RetirementRoth IRA
A retirement account funded with after-tax dollars that grows and can be withdrawn tax-free.
Personal FinanceTax Bracket
A range of income taxed at a specific rate in a progressive tax system.
Personal FinanceEmergency Fund
A savings reserve set aside to cover unexpected expenses or financial emergencies.