There’s one account that many people completely overlook—the Health Savings Account (HSA)—and it could be a game-changer for your finances.

If you’ve never seriously considered an HSA or if you’ve been confused about how it works, you’re not alone. I’ve noticed that many of my clients don’t fully understand the benefits of HSAs, what they cover, or even if they qualify to contribute. As a result, they miss out on one of the best tax-advantaged opportunities available to them, leaving a powerful financial tool on the table.

That’s why, in this blog post, I want to clear up some of the confusion and highlight why the HSA should be on your radar. After all, it’s not just about saving for medical expenses—it’s about how it can help you build wealth, lower your taxes, and prepare for your financial future.

What Exactly Is a Health Savings Account?

An HSA is more than just a way to pay for medical expenses. In fact, it’s the only account that offers triple tax advantages, meaning your money could effectively never be taxed. Yes, you read that right. 

Here’s how it works:

• Contributions are tax-deductible or made pre-tax: This means you can lower your taxable income for the year you contribute to your HSA.
• The earnings in the account grow tax-free: Your interest, dividends, and capital gains grow without being taxed.
• Withdrawals for qualified medical expenses are tax-free: When you need to access the funds for medical expenses, you won’t pay any taxes on that money when you take it out. 

With these benefits, it’s easy to see why an HSA could be a crucial part of your financial strategy. However, there are a few myths about HSAs that are keeping people from fully utilizing this valuable tool. Let’s take a look at the top three myths about HSAs and clear up some of the confusion.

Myth #1: HSAs Are Just Savings Accounts

One of the biggest misconceptions about HSAs is that they are simply savings accounts for medical expenses. While that’s true to some extent, it’s not the whole story. An HSA has the ability to do so much more.

In fact, one of the best-kept secrets of an HSA is that you can invest your HSA funds into stocks, bonds, and mutual funds just like you would in a retirement account like an IRA or 401K. This opens up a world of opportunity for your money to grow beyond what would be possible in a typical savings account.

Consider this: healthcare costs are only going to increase as you get older, and you’ll likely need a larger amount of money saved up for those expenses. By investing your HSA funds, you’re not just saving money for medical expenses—you’re building a long-term financial resource to cover those costs when the time comes. This makes an HSA an incredible tool to not only support future medical expenses, but build long term wealth as well. 

Myth #2: You Can Only Get an HSA Through Your Employer

It’s true that many employers offer HSAs as part of their benefits package, but this doesn’t mean you’re limited to only using the one your employer provides. In fact, you can open an HSA independently if you meet certain criteria—particularly if you have a health insurance plan that qualifies.

To contribute to an HSA, you need to be enrolled in what the IRS deems a high-deductible health plan (HDHP), but these plans are available to individuals outside of the employer setting. 

If you’re self-employed or your employer doesn’t offer an HSA, you still have the option to open one on your own.

Here’s what you need to do if you want to open an HSA independently:

• Ensure you have a qualifying HDHP: You must have a health insurance plan that meets the IRS requirements for an HDHP, which we’ll get into shortly.
• Open an HSA with a brokerage firm: Once you have a qualifying insurance plan, you can open an HSA with a bank or brokerage firm, such as Fidelity or Lively.
• Consider investing your funds: Once your HSA is open, consider investing some of your contributions to take advantage of tax-free growth.
• Document your contributions: When filing your taxes, make sure you report your HSA contributions to benefit from the tax deduction.

Myth #3: You Need a High Deductible Health Plan (HDHP) to Contribute

Many people assume that you must have an HDHP to contribute to an HSA. While it’s true that you must have a qualifying HDHP, not all high-deductible plans are labeled as such. The IRS has specific guidelines for what qualifies as an HDHP, so it’s important to understand the requirements.

The IRS defines an HDHP based on the following criteria for 2025:

• For Self-only coverage:
  • Minimum annual deductible: $1,650
  • Maximum annual deductible and out-of-pocket expenses: $8,300
• For Family coverage:
  • Minimum annual deductible: $3,300
  • Maximum annual deductible and out-of-pocket expenses: $16,600

If your health insurance plan meets these guidelines, you can contribute to an HSA—regardless of whether it’s specifically labeled as an HDHP.

Additionally, keep in mind that HSAs are flexible in that they allow you to carry the balance over from year to year. Unlike Flexible Spending Accounts (FSAs), which require you to use the funds within the year or forfeit them, an HSA is yours to keep—growing over time and traveling with you despite your employment and allowing you to save for both medical expenses and retirement.

Oh, and One More Thing…

If you’re still unsure about how to take advantage of an HSA, now is a great time to act. Don’t forget you have until the tax deadline to contribute for the previous year. 

2025 Contribution Limits:

• Individual: $4,300
• Family: $8,550

Plus, those 55 and older can contribute an additional $1,000 as a catch-up contribution.

If you qualify for an HSA and haven’t been using it to its full potential, now is the time to start. With the ability to save more, invest more, and keep more of your money, the HSA is a powerful tool to help secure your financial future. Whether you use it for current healthcare expenses or long-term investments, don’t let these myths hold you back from making the most of this opportunity. Take control of your finances and start maximizing your HSA today!

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