HSA Tax Savings Calculator

How much should I contribute to my HSA?

Best strategy: Max it out if possible ($4,300 individual / $8,550 family for 2025)

Why max out your HSA?

• Better than 401(k): HSA has triple tax advantage vs 401(k) double advantage (no tax on withdrawals for medical)
• Medical expenses in retirement: Average couple needs $315,000 for healthcare in retirement (Fidelity 2024)
• No "use it or lose it": Unlike FSA, HSA rolls over forever. Save for future medical expenses.
• Invest it: After $1,000-$2,000 cash, invest the rest (grows tax-free for decades)

Contribution priority order (financial planners recommend):

• 1. Employer 401(k) match (free money)
• 2. Max HSA ($4,300-$8,550) - best tax advantages
• 3. Max Roth IRA ($7,000)
• 4. Max 401(k) ($23,500)

Can I use HSA money for non-medical expenses?

Before age 65: Yes, but you'll pay income tax + 20% penalty (don't do this - defeats the purpose)

After age 65: Yes, with NO penalty (just income tax like a traditional IRA). Medical expenses still tax-free.

Qualified medical expenses (tax-free at any age):

• Doctor visits, hospital stays, surgery
• Prescription medications
• Dental care (cleanings, fillings, crowns, braces)
• Vision care (eye exams, glasses, contacts, LASIK)
• Mental health services (therapy, counseling)
• Medical equipment (crutches, wheelchairs, blood pressure monitors)
• Long-term care insurance premiums (age-based limits)
• Medicare premiums (Part B, Part D, Medicare Advantage - NOT Medigap)

Pro tip: Save ALL medical receipts (no time limit). Pay out-of-pocket now, let HSA grow tax-free for decades, reimburse yourself in retirement. Perfectly legal!

Do I qualify for an HSA?

You must have a High-Deductible Health Plan (HDHP) to contribute to an HSA.

2025 HDHP requirements:

• • Minimum deductible: $1,650 individual / $3,300 family
• • Maximum out-of-pocket: $8,300 individual / $16,600 family

Additional requirements:

• Cannot be enrolled in Medicare (can keep existing HSA, just can't contribute)
• Cannot be claimed as dependent on someone else's tax return
• Cannot have other non-HDHP health coverage (limited exceptions for dental, vision, specific disease insurance)
• Cannot have general-purpose FSA (limited-purpose FSA for dental/vision is OK)

Check your plan: Your health insurance card should say "HSA-eligible" or "HDHP." If unsure, ask your HR department or insurer.

How do I invest my HSA money?

Best practice: Keep $1,000-$2,000 in cash for immediate medical needs, invest the rest.

Where to invest HSA funds:

• Best HSA providers for investing: Fidelity (no fees, excellent funds), Lively (partners with TD Ameritrade), HealthEquity (popular employer choice)
• Investment options: Mutual funds, index funds, ETFs (varies by provider)
• Recommended allocation: Treat HSA like retirement account - if you're young, 80-100% stocks (S&P 500 index funds)
• Avoid: Money market / savings if you don't need cash soon (0.5% return vs 10% stock market average)

Example strategy (30-year-old, healthy):

• • $2,000 cash reserve (cover annual deductible)
• • Remaining balance invested in low-cost S&P 500 index fund
• • Pay small medical expenses out-of-pocket, let HSA grow tax-free
• • After 30 years: $4,300/year contribution = $600k+ (assuming 8% returns)

What happens to my HSA if I change jobs or insurance?

HSA is YOURS forever - completely portable.

Common scenarios:

• • Change jobs: Keep your HSA. Can transfer to new provider (free) or keep existing account.
• • Switch to non-HDHP: Can't contribute anymore, but can still use HSA funds tax-free for medical expenses.
• • Enroll in Medicare: Can't contribute after enrolling, but can use accumulated funds tax-free (including Medicare premiums!).
• • Leave workforce: HSA stays with you. No "use it or lose it" ever.
• • Return to HDHP later: Can start contributing again (no waiting period).

Pro tip: If you have a bad HSA provider (high fees, limited investment options), transfer to Fidelity or Lively for free. It's your account - you control it.