Get More Out of Your HSA: From a Financial Advisor

May 14, 2025

A Health Savings Account (HSA) is not just for paying medical bills. It can also be a powerful tax tool if used wisely. Still, many Americans aren’t making the most of it.

A survey in 2023 by the Plan Sponsor Council of America found something interesting. More than 10% of eligible people have not opened a Health Savings Account (HSA). Also, 1 in 5 current HSA holders did not make any contributions last year.

That means millions may be missing out on tax savings and long-term growth potential. If you are new to HSAs or already contributing, here are six surprising features. These features could make your account even more valuable.

1. Young Adults Can Max Out Like a Pro

If you are between 18 and 26 years old, you might be able to open your own HSA. This is possible if you are covered by a parent’s HSA-eligible health plan.

You can also contribute up to the full family coverage limit. For 2025, that’s $8,550. That’s nearly double the limit for self-only coverage ($4,300).

Why does this matter? Starting early gives your savings more time to grow through compounding.

Even small contributions invested wisely can snowball over decades. You may not have thousands to give, but others, like family members, can help. However, only your contributions lower your taxable income.

2. It’s Not Just for Doctor Visits

HSAs cover far more than standard checkups and prescriptions. Many people don’t realize the wide variety of eligible expenses that qualify, including:

●      Family planning: Birth control, fertility treatments, and pregnancy tests.

●      Travel for treatment: Transportation and lodging (within IRS limits) tied to medical procedures.

●      Vision and dental care: Glasses, contacts, cleanings, and even orthodontics.

●      Over-the-counter meds: Pain relievers, allergy drugs, menstrual products, and sunscreen.

●      Therapies and services: Acupuncture, chiropractic care, smoking cessation programs, and more.

Curious if an expense qualifies? The IRS has a list of items you can claim. However, it is your job to make sure your expense is valid.

3. Reimburse Yourself—Years Later

Here’s a little-known benefit: You can reimburse yourself for qualified medical expenses anytime. Just make sure those expenses happened after you opened your HSA.

Let’s say you pay out of pocket today but want to let your HSA investments grow. You can wait months or even years, then withdraw funds tax-free later to reimburse yourself. Just follow these rules:

●      Keep accurate receipts.

●      Ensure you didn’t deduct the expense on your tax return.

●      Match the reimbursement exactly to the original cost.

Think of this as a built-in emergency fund strategy. By saving receipts now, you give yourself flexibility in the future.

4. Pay Certain Insurance Premiums

While HSAs can’t usually be used to pay insurance premiums, there are a few exceptions:

●      COBRA premiums (after leaving a job)

●      Health coverage during unemployment

●      Medicare Part A, B, D, and Advantage plans (after age 65)

●      Employer-sponsored retiree plans (after age 65)

Using HSA funds during a period of unemployment or retirement can ease financial strain while keeping your healthcare intact.

5. Spend on Anything—After Age 65

Once you turn 65, your HSA becomes even more flexible. You can withdraw money for any purpose without penalties. Funds for qualified medical expenses stay tax-free.

Non-medical withdrawals are taxed as regular income. This is similar to distributions from a traditional IRA. However, there is no extra 20% penalty.

This makes the HSA a hybrid tool: part medical account, part retirement resource.

6. Your HSA Belongs to You—Not Your Employer

Unlike flexible spending accounts (FSAs), which are “use it or lose it,” your HSA stays with you, even if you change jobs or retire. You can even transfer your HSA to a different provider if you find one with better investment options or lower fees.

Not sure if you're eligible? If you have a high-deductible health plan (HDHP), chances are good you qualify. It might be worth looking into.

Bottom Line

HSAs have three tax benefits. First, contributions can be deducted from your taxes. Second, the money grows without being taxed.

Finally, withdrawals for qualified expenses are tax-free. But those benefits only go as far as you take them. By understanding the lesser-known features of HSAs, you can unlock serious value—now and in the future.

Sources:

https://www.cigna.com/individuals-families/member-guide/eligible-expenses

https://www.fidelity.com/learning-center/smart-money/hsa-benefits

Disclosures:

This information is an overview and should not be considered as specific guidance or recommendations for any individual or business.

This material is provided as a courtesy and for educational purposes only.

These are the views of the author, not the named Representative or Advisory Services Network, LLC, and should not be construed as investment advice. Neither the named Representative nor Advisory Services Network, LLC gives tax or legal advice. All information is believed to be from reliable sources; however, we make no representation as to its completeness or accuracy. Please consult your Financial Advisor for further information.