The HSA.
The only triple-tax-advantaged account in the US tax code.

Section 1 · The three (really four) tax advantages

Most accounts get one or two tax advantages. HSAs get three, plus a fourth if you contribute through payroll.

1. Contributions are pre-tax (or deductible)

Payroll HSA contributions avoid federal income tax, state income tax in most states, AND payroll taxes (FICA, 7.65% on top). Direct contributions are above-the-line deductions. You do not need to itemize to claim them.

2. Growth is tax-free

Interest, dividends, and capital gains inside the HSA are never taxed.

3. Withdrawals for healthcare are tax-free

Any qualified medical expense (doctor visits, prescriptions, dental, vision, hearing aids, much more) is withdrawn tax-free with no time limit between when the expense was incurred and when you reimburse yourself verify×DON'T TRUST, VERIFYClaim: HSA reimbursements for past qualified medical expenses have no time limit.Verify at: IRS Publication 969 ↗As long as the expense was incurred after the HSA was established and you have not already claimed it on taxes, you can reimburse yourself years later..

Section 2 · The HDHP requirement

To open and contribute to an HSA, you must be enrolled in a qualifying High-Deductible Health Plan (HDHP).

2026 HDHP minimums

• Self-only: minimum $1,700 deductible
• Family: minimum $3,400 deductible

verify×DON'T TRUST, VERIFYClaim: 2026 HDHP minimum deductibles are $1,700 self-only and $3,400 family.Verify at: IRS Rev. Proc. for 2026 HDHP/HSA limits ↗IRS publishes annual inflation-adjusted HDHP and HSA limits each spring for the following calendar year.

The trade-off

• HDHPs have lower monthly premiums.
• You pay more out-of-pocket before insurance kicks in.
• The HSA triple tax advantage is the compensation for the higher out-of-pocket risk.

For healthy people with low expected medical costs, the premium savings plus HSA tax advantages often make the HDHP+HSA combination the better financial choice even before investing the HSA.

For people with significant ongoing medical expenses, a comprehensive PPO may be more cost-effective despite the lower tax advantages. The math depends on your specific health situation and the premium differential between the two plans your employer offers. Model it before choosing.

Section 3 · 2026 contribution limits

verify×DON'T TRUST, VERIFYClaim: 2026 HSA contribution limits are $4,400 self-only and $8,750 family.Verify at: IRS Publication 969 ↗IRS publishes annual inflation-adjusted HSA limits each spring for the following calendar year.

Contribution rules

• You can contribute until the tax-filing deadline (April 15) for the prior tax year.
• You cannot contribute in any year in which you are enrolled in Medicare (Part A or B).
• You cannot contribute if you are also enrolled in a general-purpose Flexible Spending Account (FSA).
• You cannot contribute if you are claimed as a dependent on someone else's return.

Section 4 · The most powerful HSA strategy

Pay healthcare costs out-of-pocket if you can afford to. Invest the HSA balance. Let it compound tax-free for decades.

You can reimburse yourself for past qualified healthcare expenses at any time. There is no statutory time limit between the expense and the reimbursement.

This turns the HSA into a backdoor additional retirement account: triple-tax-advantaged rather than double, with the option to access the money tax-free at any age once you have qualifying receipts.

Section 5 · After age 65

At age 65, the HSA becomes the most flexible account in the US tax code:

• Withdrawals for any purpose, not just healthcare, are taxed as ordinary income (like a Traditional IRA).
• No 20% penalty for non-healthcare withdrawals after 65.
• Healthcare withdrawals remain tax-free.

This makes the HSA effectively a Traditional IRA with a tax-free option for healthcare costs. No other account has this combination.

Section 6 · Where to open one

If your HSA is through your employer, use whatever low-cost index fund is available. You can roll the employer HSA over to a better custodian (Fidelity is the standard recommendation) once per year.

Fidelity HSA (the default recommendation)

• No account fees.
• Access to FZROX (0.00% expense ratio) and other zero-fee index funds.
• Same brokerage interface as the rest of Fidelity, if you already have an account there.
• Direct contributions and rollover contributions both supported.

verify×DON'T TRUST, VERIFYClaim: Fidelity HSA has no account fees and supports zero-fee index funds.Verify at: Fidelity HSA product page ↗Confirm current fee structure before opening; terms can change.

Lively HSA (alternative)

Modern interface, integrates with Schwab for investment options. Free for individuals.