Definition
A tax-advantaged account for medical costs, available with a qualifying high-deductible health plan; 2026 limits are $4,400 self-only and $8,750 family.
What it means
An HSA lets you set aside money for qualified medical expenses with three tax benefits: contributions are deductible or pre-tax through payroll, growth is tax-free, and withdrawals for qualified medical costs are tax-free. To contribute, you must be covered by a high-deductible health plan and generally have no other disqualifying coverage or Medicare. For 2026, the contribution limits are $4,400 for self-only and $8,750 for family coverage, plus $1,000 if you are 55 or older, and a qualifying plan must have a deductible of at least $1,700 self-only or $3,400 family. Under a 2025 law, bronze and catastrophic marketplace plans are treated as HSA-compatible starting in 2026. Unused money rolls over every year and stays yours if you change jobs. Non-medical withdrawals before 65 are taxed plus a 20% additional tax.
Example
A family that contributes the 2026 maximum of $8,750 through payroll in the 22% bracket saves about $1,925 of federal income tax, plus about $669 of FICA tax.
Illustrative numbers only. Your situation will differ.