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HSAs, 529s, and Specialty Tax-Advantaged Accounts

The Health Savings Account

The HSA is the only account in the US tax code with triple tax advantage: contributions are tax-deductible, investments grow tax-free, and withdrawals for qualified medical expenses are tax-free. The 2025 contribution limit is $4,300 for individuals and $8,550 for families. Unlike FSAs, HSAs have no use-it-or-lose-it rule—funds roll over indefinitely and the account is yours permanently, even if you change employers. After age 65, HSA withdrawals for non-medical expenses are taxed as ordinary income (like a Traditional IRA) but carry no penalty. Strategic HSA use: pay current medical expenses out of pocket, invest HSA contributions in index funds, save receipts, and reimburse yourself decades later for tax-free growth.

HSAs, 529s, and Specialty Tax-Advantaged Accounts

The Health Savings Account

The HSA is the only account in the US tax code with triple tax advantage: contributions are tax-deductible, investments grow tax-free, and withdrawals for qualified medical expenses are tax-free. The 2025 contribution limit is $4,300 for individuals and $8,550 for families. Unlike FSAs, HSAs have no use-it-or-lose-it rule—funds roll over indefinitely and the account is yours permanently, even if you change employers. After age 65, HSA withdrawals for non-medical expenses are taxed as ordinary income (like a Traditional IRA) but carry no penalty. Strategic HSA use: pay current medical expenses out of pocket, invest HSA contributions in index funds, save receipts, and reimburse yourself decades later for tax-free growth.