HSA Calculator
A Health Savings Account (HSA) is one of the most powerful tax-advantaged accounts available. This calculator shows you exactly how much the "triple tax advantage" is worth compared to investing the same money in a regular brokerage account.
Triple Tax Advantage Breakdown
Avoided 27% income tax on $88,000.00 contributed
Avoid annual tax drag from dividends and rebalancing (not quantified)
No 15% capital gains tax on $105,006.78 in growth when used for medical expenses
Important Notes
- • HSA contribution limits for 2026: $4,400 (individual) / $8,750 (family)
- • Non-qualified withdrawals before 65 incur 20% penalty + income tax
- • After 65, non-qualified withdrawals are taxed as income (no penalty)
- • Must have a High Deductible Health Plan (HDHP) to contribute
Important note: Values displayed here are estimates for educational purposes. This tool is not financial, tax, or legal advice. HSA rules and contribution limits change - verify current limits with the IRS. Consider speaking with a qualified professional for guidance specific to your situation.
What is the Triple Tax Advantage?
An HSA offers three distinct tax benefits that no other account provides:
1. Tax-deductible contributions Money you contribute to an HSA is not subject to federal income tax (and often not state income tax either). This is an immediate tax savings on every dollar you contribute.
2. Tax-free growth Unlike a brokerage account where you pay capital gains tax on investment growth, HSA investments grow completely tax-free. This means you pay no taxes on dividends or capital gains.
3. Tax-free withdrawals When you use HSA funds for qualified medical expenses, you pay zero tax on withdrawals. This includes the original contributions AND all the growth.
HSA vs Brokerage: Why the Difference is Huge
Let's compare what happens to $4,400 (the 2026 individual HSA limit) invested for 20 years:
Brokerage Account:
- You earn $4,400, but pay ~27% income tax first = $3,212 actually invested
- After 20 years at 7% return = ~$12,428
- Pay 15% capital gains on the ~$9,216 gain = $1,382 in taxes
- Final after-tax value: ~$11,046
HSA Account:
- Full $4,400 goes in tax-free
- After 20 years at 7% return = ~$17,018
- Withdraw tax-free for medical expenses
- Final value: ~$17,018
That's over 54% more in your pocket - from the same starting income.
Who Can Contribute to an HSA?
To contribute to an HSA, you must:
- Be enrolled in a High Deductible Health Plan (HDHP)
- Not be enrolled in Medicare
- Not be claimed as a dependent on someone else's tax return
- Not have other non-HDHP health coverage
2026 HSA Contribution Limits
| Coverage Type | Under 55 | 55 and Older |
|---|---|---|
| Individual | $4,400 | $5,400 |
| Family | $8,750 | $9,750 |
The extra $1,000 for those 55+ is called the "catch-up contribution."
HSA Investment Strategy
Many people don't realize you can invest HSA funds just like a 401(k) or IRA. Here's a smart approach:
Pay medical expenses out of pocket now. Keep receipts for everything. Let your HSA investments grow tax-free for decades.
Reimburse yourself later. There's no time limit on reimbursement. You can pay for a medical expense in 2026 and reimburse yourself from your HSA in 2046 - after 20 years of tax-free growth.
After 65, it becomes a super IRA. Non-medical withdrawals after 65 are taxed as ordinary income (like a traditional IRA), but there's no penalty. Medical withdrawals remain tax-free forever.
Common Questions
What counts as a qualified medical expense?
Qualified expenses include most medical, dental, and vision costs: doctor visits, prescriptions, glasses, dental work, and more. The IRS provides a full list in Publication 502.
What happens if I use HSA funds for non-medical expenses?
Before age 65: You'll pay income tax PLUS a 20% penalty. After age 65: You'll pay income tax only (no penalty) - it essentially becomes a traditional IRA.
Can I still contribute if my employer doesn't offer an HSA?
Yes! As long as you have a qualifying HDHP, you can open and contribute to an HSA on your own through providers like Fidelity, Lidelity, or others.
What if I switch to a non-HDHP plan?
You can no longer contribute, but your existing HSA funds remain yours forever. You can still invest them and use them for qualified medical expenses tax-free.
The Bottom Line
If you're eligible for an HSA and not maxing it out, you're leaving significant tax savings on the table. For those pursuing financial independence, the HSA is arguably the most tax-efficient account available - better than a 401(k) or Roth IRA when used optimally.
The calculator above shows you exactly how much those tax savings are worth in your specific situation. Adjust the tax rates to match your brackets and see the impact for yourself.