health savings account (HSA)

The health plan that pairs with an HSA

Through 2025, a person can set up an HSA, contribute to it, or both only if they are covered under an HSA-eligible HDHP. An HSA-eligible plan must conforms to certain IRS rules, and most health plans with “high” deductibles (meaning above the minimum deductible requirements for HDHPs) are not considered HDHPs. (These rules will be relaxed in 2026, as discussed below.)

As an example, consider the plans available in Orange County, Florida, in 2025: Of the 191 plans available, only two are HDHPs that will allow the enrollee to contribute to an HSA.⁸ This is despite the fact that dozens of the available plans have deductibles above the $1,600 minimum requirement that the IRS uses to define a “high” deductible in 2025.⁹

The reason most plans with “high” deductibles are not HSA-qualified is because the IRS also has other requirements for HSA-qualified HDHPs:

• The 2025 maximum out-of-pocket is limited to $8,300 for self-only coverage or $16,600 for family coverage.⁹ Non-HDHPs can have maximum out-of-pocket limits as high as $9,200 for self-only coverage and $18,400 for family coverage,¹⁰ so a lot of plans are not HSA-qualified because their out-of-pocket limits are too high.
• HDHPs cannot pay for anything other than preventive care until the minimum deductible is met. So a plan with pre-deductible copays for expenses such as non-preventive office visits or prescriptions cannot be an HDHP.¹¹

Bronze and Catastrophic Marketplace plans: HSA-qualified starting in 2026

Under H.R. 1, the “One Big Beautiful Bill Act” (OBBBA) that was enacted in July 2025, more plans will be HSA-eligible starting in 2026. In addition to the existing IRS guidelines for HDHPs, the OBBBA expands the definition of HSA-eligible HDHPs to include Bronze and Catastrophic plans purchased through the Marketplace.¹²

If we look at the example above, of Orange County Florida, there are 61 Bronze plans available in 2025, including the two that are HSA-qualified under 2025 rules. So the new rule will make HSAs much more widely available to Marketplace enrollees.

In 2025, almost 7.3 million people enrolled in Bronze Marketplace plans, out of 24.3 million Marketplace enrollees nationwide.¹³ Relatively few of them were eligible to contribute to HSAs in 2025, since most Bronze plans are not HDHPs under 2025 rules. But starting in 2026, all Bronze plan enrollees will be eligible to contribute to HSAs, as long as they don’t have any additional health coverage in place (with the exception of certain limited benefit plans that the IRS allows in conjunction with an HSA-eligible plan).¹⁴

Catastrophic plans will also be considered HDHPs starting in 2026. But Catastrophic plans are only an option for applicants who are under age 30, and the federal premium subsidies that reduce most Marketplace enrollees’ premiums cannot be used with Catastrophic plans.¹⁵ As a result, only about 54,000 people selected these plans in 2025, out of 24.3 million Marketplace enrollees.¹⁶

IRS expands 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.¹¹ (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.)¹⁷

So HDHPs cannot have copays for office visits or prescriptions before the deductible is met, which is one of the ways they differ from other health plans that have high deductibles but are not HDHPs. (As described above, this will change starting in 2026, when all Bronze Marketplace plans will be considered HDHPs, regardless of their benefit structure.)

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.¹⁸ 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.¹⁹ 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.²⁰

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.²¹

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) will be able to contribute to an HSA and will be able to use HSA funds to pay the DPC membership fees.²²

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 2025; the IRS indexes them for inflation annually.) If your age is:²³

• 40 or younger, you can withdraw $480 tax-free to pay long-term care insurance premiums
• Older than 40, but not older than 50, you can withdraw $900
• Older than 50, but not older than 60, you can withdraw $1,800
• Older than 60, but not older than 70 you can withdraw $4,810
• Older than 70, you can withdraw $6,020

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.