Add an HSA to Your Financial Toolkit

Healthcare costs keep climbing, and as a result, more people are turning to Health Savings Accounts (HSAs) as a powerful way to take control of their medical spending. From financial influencers to tax pros to everyday families trying to stretch their healthcare dollars, HSAs are becoming one of the smartest, most flexible ways to save.

They’re sleek, they’re tax efficient, and they’re surprisingly misunderstood. But don’t worry — we’re breaking down exactly why HSAs can be a smart financial decision, how they can help you and your family, and the little-known rules that can make a big impact.

1. Triple Tax Advantage = Maximum Savings

The tax benefits of an HSA are unmatched. It’s the only account that offers all three perks:

• Tax-free contributions

• Tax-free growth

• Tax-free withdrawals when used for qualified medical expenses

For California, HSA contributions are taxed at the state level — but the federal tax perks still make HSAs a top financial tool.

2. Switching Jobs or Health Plans? Your HSA Moves With You

One of the best parts of an HSA is that it’s yours. Not your employer’s.

But your contribution limit depends on how many months you were enrolled in an HSA-eligible plan. So if you were only eligible for 6 months in 2026, your contribution limit would be prorated to 50%.

3. Using HSA Funds for Non-Medical Expenses

Life happens — and sometimes you need funds for something other than healthcare. Here’s what to expect:

• Before age 65: Income tax + a 20% penalty

• After age 65: No penalty — you just pay income tax, like a traditional IRA

That means after 65, your HSA can double as another retirement account.

4. Can You Use an HSA to Pay for Health Insurance Premiums?

Not usually. You can’t use HSA dollars to pay for employer-sponsored or individual plans.

But you can use HSA funds for:

• Medicare premiums (after age 65)

• COBRA premiums

• Long-term care insurance (within IRS limits)

  
  

5. HSAs Cover More Than You Think

Your HSA isn’t just for doctor visits and prescriptions. You can also use it for things like prescription sunglasses, acupuncture, contacts, OTC medications, and much more. People are often surprised by just how many everyday items are eligible. Major retailers like Amazon or Target will also flag products that are eligible for HSA reimbursement.

6. “Aren’t HSA Plans Those Super High Deductible Plans?” Not Always.

To be HSA-eligible, a plan must meet IRS rules — but that doesn’t automatically mean a $7,000+ deductible.

Many HSA-eligible plans actually have:

• Lower deductibles than expected

• Lower out-of-pocket maximums than non-HSA plans

  
  

7. Can You Have an HSA and an FSA? Yes — With One Rule

You can pair an HSA with an FSA, but only if the FSA is a limited-purpose FSA, which covers dental and vision only.

A dependent care FSA (DCFSA) has no restrictions.

Typically, you must also meet your health plan’s deductible before using limited-purpose FSA funds for medical expenses.

8. Bonus Contributions After Age 55 — Extra Savings Power

Once you turn 55, you can contribute an extra $1,000 per year, known as a catch-up contribution.

For 2026, the standard limits are:

• $4,400 for individuals

• $8,750 for families

If either spouse is 55+, you can add the extra $1,000. If both spouses are 55+, each can make their own catch-up contribution (each into their own HSA).

Bottom Line: HSAs Can Transform How Families Save

If you want a smarter way to manage healthcare costs, build tax-free savings, and prepare for the unexpected, an HSA can be one of the most valuable tools in your financial toolbox.

Want help deciding whether an HSA plan is right for you and your family? We’re here to guide you through it - clearly, simply, and with your goals in mind.