A Health Savings Account (HSA) is a tax-advantaged account that works with a High Deductible Health Plan (HDHP). You can use it to pay for eligible medical expenses now or save for future healthcare costs. You decide how much to contribute, contributions are deducted from your paycheck pre-tax, and you can use the funds as they are deposited into your account. Funds can be used for eligible expenses for you, your spouse, and your tax dependents, including deductibles, copayments, and prescriptions.
Who should consider an HSA
- Employees enrolled in the High Deductible Health Plan (HDHP)
- Those who want to offset higher deductibles and out-of-pocket costs
- People who want to save for future healthcare expenses, including in retirement
Eligibility and enrollment
- Enrollment in the High Deductible Health Plan (HDHP) is required, and you may not have other non-HDHP coverage (such as a spouse’s PPO plan or Medicare)
- You may elect to open an HSA as a new employee, during open enrollment, or following a qualifying life event
- Contribution amounts can be changed at any time
Key benefits
- Contributions are made pre-tax
- Funds grow tax-free (if invested)
- Withdrawals are tax-free for qualified medical expenses
- Funds roll over each year with no “use it or lose it” rule
- Funds remain yours even if you change jobs
- Savings can be used for future healthcare costs
Contribution limits
Employer contribution:
- $500 per year for individual coverage
- $1,000 per year for family coverage
FY27 contribution limits:
- Up to $4,400 (individual coverage)
- Up to $8,750 (family coverage)
- This limit includes both employer and employee contributions.
Funds are available as they are deposited into your account (not front-loaded)