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Health Savings Account Guide
Everything you need to know about HSAs — how they work, eligibility, contribution limits, tax benefits, and investment options.
What is an HSA?
A Health Savings Account (HSA) is a tax-advantaged savings account designed to help individuals enrolled in High Deductible Health Plans (HDHPs) save for qualified medical expenses. HSAs offer a unique triple tax advantage: contributions are tax-deductible, growth is tax-free, and withdrawals for qualified medical expenses are tax-free. Unlike Flexible Spending Accounts (FSAs), HSA funds roll over year to year and belong to you — even if you change employers or health plans. This makes HSAs a powerful tool for both short-term healthcare spending and long-term retirement planning.
HSA Triple Tax Advantage
Tax-deductible contributions
Contributions reduce your federal taxable income. Most states also recognize HSA contributions as tax-deductible.
Tax-free growth
Interest and investment earnings grow tax-free, helping you build wealth over time.
Tax-free withdrawals
Pay for qualified medical expenses completely tax-free at the federal level.
HSA Frequently Asked Questions
For 2025, the annual HSA contribution limit is $4,300 for self-only coverage and $8,550 for family coverage. Individuals 55+ can contribute an additional $1,000 catch-up contribution.
HSAs are owned by the individual, roll over year to year, and are portable. FSAs are employer-owned, typically use-it-or-lose-it, and tied to your employer. HSAs require an HDHP; FSAs do not.
Yes! Demo.Health offers 33 low-cost Vanguard mutual funds for HSA investments, allowing your savings to grow over time.
At 65, you can withdraw HSA funds for any purpose without penalty (though non-medical withdrawals are subject to income tax). Medical expense withdrawals remain tax-free.
Ready to open your HSA?
Start saving on healthcare costs today with a Demo.Health Health Savings Account.