Contributing to a Health Savings Account is unique by allowing for tax-deductible contributions combined with tax-free distributions.  No other tax-advantaged savings opportunities allow for both.

With each passing year, HSAs continue to gain in popularity.  To be eligible, you need to be a participant in a qualifying high-deductible health insurance plan sponsored by your employer or purchased individually. Ask the insurance company that administers your current health plan whether you qualify to contribute to an H.S.A.

According to the IRS in their Publication 969 on Health Savings Accounts and Other Tax-Favored Health Plans available at: For 2022, if you have self-only HDHP coverage, you can contribute up to $3,650. If you have family HDHP coverage, you can contribute up to $7,300.  The IRS just announced that the maximum contributions to an H.S.A. for 2023 will increase to $3,850 for individuals with self-only coverage and $7,750 for individuals with family coverage.

Anyone 55 or older can add an additional $1k to their H.S.A. this year. Married couples with both spouses over the age of 55 can add a second $1k, but the second spouse would need to set up their own Health Savings Account, which shouldn’t be a dealbreaker. The deadline to contribute to your H.S.A. is April 15th of the following year.  So now is the time to start contributing for 2022.

Unlike Flexible Spending Accounts that come with a “use it or lose it” provision requiring the money to be spent on your family’s medical expenses the year it is set aside, money in an H.S.A. can be invested long-term in a tax-deferred account that will be available to pay your family’s healthcare costs down the road.  A common strategy is to max out the contributions to the H.S.A. each year, but then use personal funds to pay medical expenses as they become due as a way to keep as much money as possible growing within the tax-advantaged Health Savings Account.

Most financial institutions now allow for investors to set up Health Savings Accounts, allowing individuals to easily invest their H.S.A. in mutual funds or ETFs.

Tax deductible contributions coupled with tax free distributions is as easy as finding out if you participate in a qualifying high deductible health insurance plan and then maxing out the allowable contributions into a Health Savings Account whenever eligible.