What is the HSA?
A Health Savings Account is uniquely triple tax-advantaged: contributions are deductible (and avoid FICA if made through payroll), growth is tax-free, and withdrawals for qualified medical expenses are tax-free. No other US account offers all three.
You must be enrolled in a high-deductible health plan. The 2026 limits are $4,400 individual and $8,750 family, plus a $1,000 catch-up from 55.
Formula & worked example
Annual tax benefit = Contribution × (income tax rate + 7.65% FICA)
Worked example: $4,400 a year from 35 to 65 at 7%, spending $1,000 a year on medical costs, starting from $5,000 → roughly $382,000 at retirement. At a 24% bracket the payroll contributions save about $41,800 in combined income tax and FICA.
How to use this hsa calculator
- Enter your annual contribution, up to the IRS limit for your coverage type.
- Enter how much you actually spend from the HSA each year — the less, the more compounds.
- Contribute through payroll to also avoid the 7.65% FICA.
- Use 6–8% returns if you invest the balance rather than leaving it in cash.
Smart tips
- Pay current medical costs out of pocket if you can and let the HSA compound — you can reimburse yourself decades later with saved receipts.
- Contribute through payroll deduction to avoid FICA as well as income tax; direct contributions only save income tax.
- Invest the balance. Most HSAs default to cash, which wastes the tax-free growth entirely.
- After 65, non-medical withdrawals are taxed as ordinary income with no penalty — effectively a traditional IRA.
- An HSA has no use-it-or-lose-it rule, unlike an FSA. The balance rolls over forever.
Frequently asked questions
What is the HSA contribution limit for 2026?
$4,400 for individual coverage and $8,750 for family coverage, plus a $1,000 catch-up contribution from age 55.
Why is an HSA triple tax-advantaged?
Contributions are deductible, growth is tax-free, and qualified medical withdrawals are tax-free — no other account offers all three.
Can I use an HSA after retirement?
Yes. Medical withdrawals stay tax-free at any age, and after 65 non-medical withdrawals are taxed as ordinary income with no penalty.
Do I lose HSA money at year end?
No. Unlike an FSA, HSA balances roll over indefinitely and remain yours even if you change jobs or health plans.
Want the theory behind the numbers? Read our US benefits guides on the Money Blog.