What is a health savings account (HSA)?
Just as the name implies, a health savings account (HSA) is a financial account designed to help you save for qualified health care expenses. Not just anyone can open an HSA. You must be enrolled in a high deductible health plan (HDHP). And not just any HDHP is HSA qualified.
As defined by the Internal Revenue Service (IRS), the plan must have a higher deductible than typical individual health insurance benefits plans and a maximum out-of-pocket limit, including deductibles, copays and coinsurance.
HSA contribution limits
Each year, the IRS sets a limit for how much individuals can contribute to these tax-advantaged accounts. Knowing these limits can help you maximize your benefits.
2026 HSA contribution limits
- An individual with coverage under a qualifying high-deductible health plan (deductible not less than $1,700) can contribute up to $4,400 — up $100 from 2025 — for the year. The maximum out-of-pocket is capped at $8,500.
- An individual with family coverage under a qualifying high-deductible health plan (deductible not less than $3,400) can contribute up to $8,750 — up $200 from 2025 — for the year. The maximum out-of-pocket is capped at $17,000.
Catch-up contribution
When you turn 55, you can contribute an extra $1,000 each year to your HSA. It’s called a catch-up contribution. If you and your spouse are both over the age of 55, you can each contribute $1,000. Your spouse will just need to open their own HSA for their portion.
How does an HSA work?
After you enroll in a high deductible health plan (HDHP) and set up your HSA, you can begin contributing to the account. Advantages to an HSA:
- You own the account, not your employer. You can make deposits like you do with other personal bank accounts. Your employer might add money too.
- The money you contribute is tax-deductible. When you make contributions, your taxable income is reduced.
- You can invest your funds, and the interest or income is tax-free. The money can sit in your account and potentially grow over time, all of it tax-free.
- There’s no “use-it-or-lose it” policy. Since you own the account, the funds roll over year to year and the money stays with you — regardless if you leave your job or retire.
- If you’re under 65 and use the dollars for qualified medical expenses, you can withdraw the money tax-free.
- If you’re over 65, there are no stipulations on how you can use the money. You can continue to withdraw the money tax-free for medical expenses. Or you can use it for non-medical expenses, just pay your regular income tax. Some people even view their HSA as an added retirement account.
If you cash out the money before you’re 65 (and don’t use the money for qualified medical expenses), you’ll have to pay taxes on the amount, and you could be hit with a hefty 20% tax penalty.
HSA eligible expenses
You may be surprised by the wide variety of things you can spend your HSA funds on. These pre-tax dollars can go toward things like copays for medical visits, alternative health treatments, period supplies and more.
There are many types of HSA eligible expenses, but not everything is eligible. The IRS determines the list of qualified medical expenses, also known as HSA eligible expenses.
If you haven’t met the deductible for your HDHP yet, you’ll need to pay for medical appointments and services out of pocket. You can use your HSA funds to cover these expenses, and it will still count toward your deductible.
- Primary care visits
- Specialist visits
- Mental health appointments
- Lab tests
- Urgent care visits
- Imaging (MRI, CT scan, X-ray, etc.)
- Telehealth visits
- Physical therapy appointments
- Ambulance transportation
- Hospital stays
- Emergency room visits
Both prescription and OTC medications are HSA eligible expenses. Whether you need cold medicine or an inhaler, your HSA funds help you get more.
Even if your HDHP includes prescription coverage, you can use your HSA to cover copays at the pharmacy. When shopping for OTC medications, you may find that items at a pharmacy are marked as “HSA eligible” on the shelf. Lots of common household medicines are covered:
- Pain medication
- Allergy relief
- Cold and flu medicine
- Acne and eczema products
- Digestive medications
Your HSA can help you plan your family, whether you’re looking to expand your family or avoid pregnancy.
- Tampons, pads, menstrual cups and period underwear
- Birth control pills (both OTC and prescription)
- OTC fertility and pregnancy tests
- Condoms and other contraceptives
- Vasectomy or vasectomy reversal
- Tubal ligation
- Fertility appointments and treatments
- Prenatal care and appointments
- Labor and delivery costs
- Breastfeeding supplies like storage bags and nursing pads
Many alternative medicine treatments are HSA eligible expenses, even if they aren’t covered by your HDHP. Insurance companies and governments sometimes refer to these treatments as “Complementary and Alternative Medicine” (CAM).
- Acupuncture
- Homeopathy and herbal remedies
- Naturopathy visits
- Chiropractic visits
- Reiki and other energy healing
- Massage therapy
Not all vitamins and supplements are HSA eligible expenses. For example, a multivitamin that you take for general wellness may not be eligible. However, with the right documentation, you can use your HSA money to cover vitamins and supplements that treat or prevent a specific condition.
- Prenatal vitamins
- Iron supplements to treat anemia
- Vitamins to treat specific deficiencies
- Glucosamine for arthritis
You may need a prescription or Letter of Medical Necessity (LMN) from your doctor to use your HSA for these expenses.
You can use your HSA to pay for lots of other health and wellness needs:
- First aid supplies
- Blood pressure monitor
- Mobility aids like crutches and wheelchairs
- Medical alert bracelets
- Thermometers
- Glucose testing equipment
- Guide dogs and service animals
- Hearing aids and supplies
- Travel for medical appointments
- CPAP machines and supplies
If you want to use your HSA funds to pay for an expense, check the IRS guidelines. If needed, you may also book an appointment with your doctor.
Additional HSA eligible expenses with a letter
For many services, medications and appointments, you can use your HSA funds without any additional paperwork. However, there are a few things that you can only use your HSA to pay for when you have a Letter of Medical Necessity (LMN).
An LMN is a simple letter you get from a doctor that describes why you need a specific service or product, as well as what condition you will use it to treat or prevent. For example, many people get an LMN so that they can use their HSA to pay for a gym membership. The LMN may say that they would use the gym membership as part of treatment for obesity, anxiety or another condition related to fitness.
With an LMN, you may be able to use your HSA funds to pay for:
- Gym memberships and fitness equipment
- Some supplements and vitamins
- Red light therapy devices
- Saunas and cold plunges
- Weight-loss programs
- Air purifiers
If you want to use your HSA to pay for an expense like this, talk to your doctor about getting an LMN.
Can I use an HSA to pay for childcare?
Childcare and other dependent care are not HSA eligible expenses. However, there is a type of Flexible Spending Account (FSA) that allows you to use pre-tax dollars to pay for things like daycare, babysitters and summer camps. You may be able to have both an FSA and an HSA.
Understanding HSA rules and benefits
To help make the most of your employer-sponsored benefit, understand the rules. For instance, an HSA is your money, you never lose it and it could add to your retirement. Many financial experts may advise on utilizing an HSA if you have the opportunity. When considering other options, do the math for your family to figure out what makes sense for your situation. If you still have questions, talk to your company’s Human Resources representative.
Compare HSAs to other health accounts
HSAs are different from Health Reimbursement Accounts (HRA) and Flexible Spending Accounts (FSA). Comparing the different types of accounts may help you understand better how to use these accounts to your benefit.
UnitedHealthcare and Optum Bank HSA options
- Check with your employer or health plan documents to find out your options
- If an HSA is not available, explore your options at Optum Bank® , the UnitedHealthcare bank of choice.