Understanding Your HSA: How To Make It Work For You
Many people have Health Savings Accounts (HSAs), but not everyone knows how to use them or why they’re useful. If that’s you, we are here to help! Here you’ll learn the basics of HSAs, how to make contributions to an HSA, and identify what qualifies as—and pay for—HSA eligible expenses.
HSA Basics
A Health Savings Account (HSA) is a tax-advantaged account that you can use to pay for qualified medical expenses that your insurance plan may or may not cover. HSAs offer tax advantages and cover a broad range of qualified medical expenses. HSAs are not "use-it-or-lose-it," meaning the account belongs to you and your contributions can accumulate year after year—your contributions do not disappear if you don’t utilize them. You may choose to save more than what you’ll need each year to secure the annual tax advantages or to build a long-term savings account for future medical expenses.
How To Make Contributions
If your HSA is provided through your employer, contributions are usually deducted pretax from your paycheck and sent directly to your HSA bank account. Your employer may make additional contributions to your HSA, too. If you’re not contributing through your employer, you can contribute funds directly to your HSA bank and later write them off as tax deductions.
Each year, the IRS sets limits on how much you can contribute to your HSA. There are two limits based on how you file. Single filers, joint filers, and filers over the age of 55 also qualify for catch-up contributions. See our graphic below for the inflation adjusted HSA and HDHP contributions for 2025.
Identifying and Paying for HSA Eligible Expenses
Typically, you can access your funds through a debit card or checks that are linked directly to your HSA. You can use the funds in your HSA to pay for qualified medical expenses, which are defined by the IRS and include deductibles, medical supplies, and even items like eyeglasses and dental fillings.
As part of the 2020 CARES Act, over-the-counter medications and menstrual care products are now eligible for purchase with HSAs. This list includes products like allergy medication, pain relievers, prenatal vitamins, and tampons. See the full list of eligible HSA expenses here.
HSAs can be great for both tax advantages and saving for future medical needs. Consider this option when selecting your health insurance if tax deductions are meaningful to you or if you have many medical bills on the horizon.
2025 Yearly Limits
Every year, the IRS announces inflation adjustments for Health Savings Accounts (HSA) and High Deductible Health Plans (HDHP). These adjustments include maximum HSA contributions, minimum deductible amounts, and maximum out-of-pocket (OOP) limits. The new 2025 adjusted amounts are here! Check out the new program limits for 2025 below and bookmark this page for your reference.
Please note: the following adjustments apply only for the 2025 calendar year.
Need additional information? You can review the official IRS revenue procedure here.
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