A Health Savings Account (HSA) isn’t just to help pay for medical bills—it is one of the most powerful tax-advantaged tools available to taxpayers in the United States. Available to those enrolled in a High-Deductible Health Plan (HDHP), an HSA offers a unique “triple-tax advantage” that you can use to grow your wealth and plan for your future.
HSAs are member-owned accounts that allow you to save money for qualified medical expenses while avoiding taxes at three different stages:
Unlike Flexible Spending Accounts (FSAs), the funds in your HSA never expire, and they roll over from year to year.
Because of the unique flexibility of an HSA, there are a couple of powerful “hacks” you can use to take advantage of the tax benefits, depending on your financial goals.
If you don’t want to tie up your cash in savings but still want a tax break on your medical bills, you can use your HSA as a pass-through account.
If you do want to build long-term wealth, you can use your HSA to effectively “wash cash” and make it tax-free down the road. Because there is no time limit on when you can reimburse yourself for a qualified medical expense, here is how it works:
An HSA is arguably a better retirement vehicle than a 401(k) or traditional IRA. If you use the method above and leave your funds invested, your HSA can grow significantly over time.
Once you reach age 65, the rules change. You can withdraw funds from your HSA for any reason (not just medical expenses) without facing a penalty. These non-medical withdrawals will be taxed as regular income—exactly like a traditional 401(k) or IRA.
However, unlike those retirement accounts, your HSA will still allow you to withdraw funds tax-free for qualified medical expenses in retirement (which often increase as you get older, including Medicare premiums).
If you are ready to take advantage of these HSA strategies, I recommend setting up your account through Lively. Lively makes it incredibly simple to manage your health savings and invest for the future.
Why choose Lively?
To maximize these strategies, you need to know how much you can contribute.
| 2026 | Under age 55 | Age 55 and over |
| Individual coverage | $4,400 | $5,400 |
| Family coverage | $8,750 | $10,750* |
| 2025 | Under age 55 | Age 55 and over |
| Individual coverage | $4,300 | $5,300 |
| Family coverage | $8,550 | $10,550* |
| 2024 | Under age 55 | Age 55 and over |
| Individual coverage | $4,150 | $5,150 |
| Family coverage | $8,300 | $10,300* |
Expenses that qualify for the medical- and dental-expense deduction meet the criteria. The main purpose of the expense must be to ease or prevent a physical or mental illness. The Internal Revenue Service (IRS) outlines qualified medical expenses in Publication 502, Medical and Dental Expenses.
The IRS issued Announcement 2021-7 to help stop the spread of the coronavirus. This added personal protective gear used to prevent the spread of the coronavirus as qualified expenses. It also led to the following items qualifying as HSA-eligible expenses:
The Coronavirus Aid, Relief, and Economic Security (CARES) Act also added some other medical expenses to the list. The new items added were menstrual products and over-the-counter medications.
The following 18 items are examples of now-qualified medical expenses:
The cost of healthcare is steadily rising. The area of healthcare that we spend the most money on depends on age, insurance coverage, location, and other variables. That is why we have the most common HSA-expensed items split into four categories for you below.
Some of the most common expenses included:
Common healthcare expenses for families with young dependents include:
There are family-planning healthcare expenses that your HSA can also pay for. Your HSA can also reimburse you if you forget to use it to pay for these 12 expenses:
Emergencies will arise in everyone’s life. These eight emergency medical expenses can also be covered by your HSA:
Studies show that 1 in 5 adults experienced a mental illness in 2020. If you need to pay for mental health expenses out of pocket, your HSA may cover the following:
No. All qualified medical expenses are not HSA eligible. For example, insurance premiums may not always be considered a qualified expense. You can only use your HSA to pay for insurance premiums if they fall into one of these four categories:
An example of an insurance premium you cannot claim is Medicare supplemental insurance, such as Medigap.
HSA holders have the option to use their account for care given by an orthodontist, oral hygienists, dentist, or optometrist. This includes but is not limited to the following eight items:
Teeth whitening is not covered, since it is considered a cosmetic dental procedure and not health-related.
Preventative care that is not doctor prescribed is not always HSA eligible. Some examples of common healthcare expenses that fall into this category are:
But as with every rule, there is always an exception. If you have a doctor’s note — also called a letter of medical necessity (LOMN) — you may be able to buy items that typically wouldn’t be HSA eligible. The LOMN briefly outlines your condition and why you need a specific product or service.
The following are examples of four expenses that may qualify for the exception. These items may qualify if they are used to treat a medical condition. Before you purchase an item, you should check with your HSA administrator to determine if your expense is HSA eligible with a LOMN.
You can pay for qualified medical expenses for your spouse with your HSA. You can also pay for the medical expenses of any dependents claimed on your tax return with your HSA, as long as they meet the following the criteria: