Open enrollment is a time when millions of Americans are looking to get the most out of their benefits while reducing their healthcare costs. One of the best ways is to do this is by enrolling in a Health Savings Account (HSA).

An HSA can be a good way to save money for medical expenses and reduce your taxable income. You can automatically deposit a portion of your pay into the HSA on a pre-tax basis. Some employers contribute money as well.

Control over healthcare spending

To qualify for an HSA, you must be enrolled in a high-deductible health insurance plan (HDHP), as defined by the government. These types of plans often have lower premiums than other health insurance plans because they are designed for consumers to take more control over their healthcare spending. Money placed in the HSA can help cover the plan deductible, and once the deductible is met, the insurance starts paying for covered services. Money left in the health savings account may earn interest and is yours to keep. You can contribute up to the federal limits (for 2025, $4,300 for an individual HSA plan and $8,550 for a family plan) into your HSA account.¹

You can use your HSA funds, on a tax-free basis, to pay for qualified medical expenses such as prescription drugs, dental expenses, copays, deductibles or coinsurance amounts. Your HSA can also be used to pay your Medicare and long-term care insurance premiums.

Unlike flexible spending accounts, where you’ll lose any unused balances at the end of the year, unused HSA balances carry over from one year to the next. So, there is no “use it or lose it” worry with your HSA.

HSAs are triple tax-free

Understanding the potential of your HSA can help you take advantage of the triple-tax-free advantages HSAs can offer.

With an HSA, lowering your taxes is easy as 1-2-3:²

1. The contributions you make to your HSA are made pre-tax, so that less of your income is taxed.

2. Then money in your HSA typically grows tax-free. Many accounts offer interest earned on your savings and even investment opportunities.

3. You can withdraw money to pay for qualified medical expenses and pay no taxes on that money.

While you and your employer have until April 15, 2026, to make contributions for 2025, the time to prepare is now.³ Talk with your tax adviser to learn more.

Healthcare savings at every age

No matter what stage of life you’re in, an HSA can be a handy savings option. A young, self-employed family with an HSA plan can use the savings to cover their insurance deductible. If they don’t have dental or vision coverage, they can use it to pay for vision and dental care. Empty-nesters may find they need some new tax breaks, after the kids can’t be claimed as dependents for tax purposes.

Consumers who have 401(k) plans should analyze the benefits of HSA vs. 401(k) contributions. If you have the option of contributing to both your HSA and a 401(k), it can be difficult to decide where to focus. Consider that while both 401(k) pre-tax payroll contributions and HSA payroll contributions are made without deductions for state and federal taxes, HSA contributions are truly pre-tax in that Medicare and Social Security taxes are not withheld. Check with your accountant or tax adviser to find the approach that works for you.

Whether you’re single, have a growing family or are thinking ahead to your post-career life, HSAs can empower you to make the most of your healthcare spending. 

For informational purposes only. This information is compiled by UnitedHealthcare, and/or one of its affiliates, and does not diagnose problems or recommend specific treatment. Services and medical technologies referenced herein may not be covered under your plan. Please consult directly with your primary care physician if you need medical advice.

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Sources

1. IRS. “Part III. Administrative, Procedural, and Miscellaneous. 26 CFR 601.602: Tax forms and instructions.” Accessed August 11,2025. Retrieved from https://www.irs.gov/pub/irs-drop/rp-24-25.pdf

2. Morgan Stanley. “HSAs: An Overlooked Retirement Savings Vehicle.” April 17, 2024. Retrieved from https://www.morganstanley.com/articles/health-savings-account-retirement-tax-advantages

3. IRS. “Publication 969 (2024), Health Savings Accounts and Other Tax-Favored Health Plans.” January 23, 2025. Retrieved from https://www.irs.gov/publications/p969#en_US_2025_publink1000204075