health savings account (HSA)

The health plan that pairs with an HSA

To make contributions to an HSA, a person must have coverage under an HDHP (and no additional coverage, unless it's certain allowable supplemental coverage). Before 2026, only plans that conformed to strict IRS guidelines could be considered HDHPs. But as of 2026, under the "One Big Beautiful Bill Act," (OBBBA), HDHPs have been expanded to include all Bronze and Catastrophic plans purchased through the health insurance Marketplace. So an HDHP can be either:

• A Bronze or Catastrophic plan obtained through the health insurance Marketplace (exchange)⁷ OR
• A plan that meets the regular IRS guidelines for HDHPs (this includes minimum deductibles, caps on maximum out-of-pocket costs, and a requirement that the plan not pay for any non-preventive services before the minimum deductible is met)

The expansion of HDHPs to include all Bronze and Catastrophic Marketplace plans made HDHPs much more widely available to Marketplace enrollees starting in 2026.

In 2025, almost 7.3 million people enrolled in Bronze Marketplace plans, out of 24.3 million Marketplace enrollees nationwide.⁸ Relatively few of them were eligible to contribute to HSAs in 2025, since most Bronze plans were not HDHPs under 2025 rules. But starting in 2026, all Bronze plan enrollees are eligible to contribute to HSAs, as long as they don’t have any additional health coverage in place (except for certain limited benefit plans that the IRS allows in conjunction with an HSA-eligible plan).⁹

Catastrophic plans are also considered HDHPs starting in 2026, and the federal government took steps to make Catastrophic plans more accessible for 2026.¹⁰ But Catastrophic plans are not available in all areas,¹¹ and the federal premium subsidies that reduce most Marketplace enrollees’ premiums cannot be used with Catastrophic plans.¹² As a result, only about 54,000 people selected these plans in 2025, out of 24.3 million Marketplace enrollees.¹³

IRS expanded preventive care umbrella to cover some chronic care treatments and new preventive care

The ACA requires all non-grandfathered health plans to pay for certain preventive care before an insured meets their deductible. This rule applies to HDHPs as well. But an HDHP  cannot pay for most other, non-preventive services until the insured has met the minimum deductible.¹⁴ (As noted below, the definition of preventive care has been expanded for HDHPs, and the OBBBA also permanently allows HDHPs to pay for telehealth services before the deductible is met.)¹⁵

So unless the plan is a Marketplace Bronze or Catastrophic plan, HDHPs cannot have copays for office visits or prescriptions before the deductible is met. This is one of the ways they differ from other health plans that have high deductibles but are not HDHPs.

But under guidelines that the IRS issued in mid-2019, the list of preventive services that can be covered pre-deductible on an HDHP has been expanded to include certain treatments for certain specific chronic conditions.¹⁶ It's optional for insurers to classify these services as preventive, but if they do, the insurer can cover them (partially or in full) before the enrollee meets the deductible, and the health plan will continue to have its HDHP status. In late 2024, the IRS issued additional guidelines to further expand the list of preventive services that an HDHP can pay for before the deductible is met.¹⁷ These rule changes are explained in more detail in our overview of HDHPs.

Using your HSA funds

You can use the pre-tax savings in your HSA to pay for doctor visits, hospital costs, deductibles, co-pays, prescription drugs, or any other qualified medical expenses. Once the out-of-pocket maximum on your health insurance policy is met, your health insurance plan will pay for your remaining covered medical expenses that year, the same as any other health plan.

If you switch to a health insurance policy that’s not HSA-qualified, you’ll no longer be able to contribute to your HSA. But you’ll still be able to take money out of your HSA at any time to pay for qualified medical expenses, with no taxes or penalties assessed. If you don’t use the money for medical expenses and still have funds available after age 65, you can withdraw them for non-medical purposes with no penalties, although income tax would be assessed at that point, with the HSA functioning much like a traditional IRA.¹⁸

In 2024, the IRS issued guidance to add male condoms to the list of qualified medical expenses, thus allowing them to be purchased with pre-tax HSA (or HRA or FSA) funds.¹⁹

Starting in 2026, under the OBBBA, a person with an HDHP who also has a direct primary care (DPC) membership (with fees of no more than $150/month for a single person or $300/month for a family, and certain benefit limitations) is allowed to contribute to an HSA and can use HSA funds to pay the DPC membership fees.²⁰

You can also withdraw money from your HSA without paying taxes to pay Medicare premiums (for Medicare Part A, if you have to pay premiums for it – although most people don't – and for Medicare Part B and Medicare Part D prescription drug coverage, but not for Medicare supplement (Medigap) plans).

HSA funds can also be used to pay long-term care premiums. There are limits on how much you can withdraw from your HSA without incurring income tax to pay long-term care insurance premiums. (These limits are for 2026; the IRS indexes them for inflation annually.) If your age is:²¹

• 40 or younger, you can withdraw $500 tax-free to pay long-term care insurance premiums
• Older than 40, but not older than 50, you can withdraw $930
• Older than 50, but not older than 60, you can withdraw $1,860
• Older than 60, but not older than 70 you can withdraw $4,960
• Older than 70, you can withdraw $6,200

Frequently asked questions about HSAs

• How does a health savings account work?
• Who should consider a high-deductible health plan?
• Can I buy HSA-compatible health insurance through the exchange?
• What's the difference between an FSA and an HSA?
• Can I use my HSA to pay for COVID testing and treatment?
• Can I use my HSA to purchase over-the-counter medications?

Louise Norris is an individual health insurance broker who has been writing about health insurance and health reform since 2006. She has written hundreds of opinions and educational pieces about the Affordable Care Act for healthinsurance.org.