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6 surprising HSA benefits

Key takeaways

  • HSA savings could be used to pay for a variety of qualified medical expenses, including travel to and from medical appointments, qualified vision and dental costs, and some over-the-counter drugs.
  • HSAs are flexible. You could use the money to cover qualified medical expenses you paid for in previous years, if your HSA was open during those years.
  • Once you turn 65, you can use your HSA for just about any non-health care expense penalty-free. You just have to cover the income tax.

A health savings account (HSA) is one of the most powerful savings accounts, but you may not be maximizing its full potential. In fact, 1 in 3 eligible people haven’t opened an HSA, and most people with an HSA didn’t contribute money to the account within the last year, according to a study published in 2020 in JAMA Network Open, a journal of the American Medical Association.1 That could mean millions of Americans are missing out by not making HSA contributions that may lower their taxable income and that can be withdrawn tax-free when used to pay for qualified medical expenses.

Even if you’re already saving in an HSA, there might be key capabilities you aren’t taking advantage of yet. Learn more about this account’s potential by checking out these 6 surprising benefits of HSAs.

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1. You might be able to super save in your HSA as a young adult

HSA's annual contribution limit is set by the IRS each year and can vary depending on how many dependents are covered. For example, in 2024 you may contribute up to $4,150 for self-only coverage and $8,300 for family coverage. But if you’re 18 to 26 years old, covered by a parent’s or guardian’s HSA-eligible health plan, and not included as a dependent on their tax return, you could be eligible to open your own HSA and contribute up to the full family-coverage limit each year. That’s double the self-only coverage limit. One watchout: The parent or guardian whose family health plan you’re on can’t use their HSA money to cover your medical expenses if you have your own HSA.

Why take advantage of this under-the-radar rule? Contributing to your HSA early on and investing those savings could potentially lead to more money later in life, when your medical expenses are likely to be higher. If you keep that money invested over the long term, you could benefit from compounding—when your earnings generate earnings of their own. Don’t have $8,300 to spare? Luckily, anyone could contribute to your HSA, so their money could be gifts that keep on giving. But sorry: Their contributions can’t lower your taxable income like your own contributions can.

2. You could pay for more than just doctor bills with HSA money

Money saved in your HSA can be used to pay qualified medical expenses—and those aren’t just standard medical bills from the doctor’s office. HSAs generally cover a wide range of medical expenses. Here are some qualified expenses you could pay for with HSA dollars that you might not know about.

  • Family planning: Whether you’re trying to expand your family or keep it from growing, your HSA could offset the costs of birth control pills, fertility treatments, and pregnancy tests.
  • Health care–related travel: You could use HSA savings to pay for getting to and from surgery and other necessary medical treatments. Your HSA could also cover hotel costs during a medical treatment–related stay for you and a travel companion, up to certain daily limits.
  • Vision: HSA dollars could pay for a new pair of glasses, contact-lens solution, and laser eye surgery.
  • Dental: HSA savings could cover dentist and orthodontist bills for cleanings, fluoride treatments, and braces.
  • Over-the-counter drugs: At the pharmacy, your savings could pay for certain over-the-counter pain relievers and allergy medicines, and also sunscreen and menstrual products.
  • Other expenses: Some more surprising items that your HSA might cover: drug-addiction and stop-smoking programs, crutches, chiropractor visits, certain medically recommended weight loss or weight management programs, insulin, acupuncture, special education for a child with a diagnosed learning disability, and even lead-based paint removal, if certain requirements are met.

Here’s a more complete list of what your HSA could cover, if you have questions about what expenses might qualify. Remember, it’s your responsibility to determine whether or not a particular expense is qualified before you plan to pay for it with HSA money.

3. You could be reimbursed with HSA dollars for years-old qualified medical expenses

There’s no deadline to get money from your HSA for a qualified medical expense. You could reimburse yourself months—even years—after you originally paid for the qualified medical expense. But there are some rules you have to follow.

  • You must have incurred the medical expense after you opened your HSA.
  • You can’t have itemized that medical expense as a deduction on your tax return.
  • Be prepared to show receipts in case the IRS audits you. A best practice: Keep both paper receipts and electronic ones for any medical expenses you might want reimbursed from your HSA. And all requested reimbursements should be exactly the cost of the medical expense to the cent.

This all means that you could prioritize saving in your HSA over getting reimbursements from it. If money’s tight in the future, you could tap into those HSA savings tax-free if you have unreimbursed qualified medical expenses. Bonus: You could invest the HSA money as soon as you contribute it, which could potentially grow while you hold off on getting expenses reimbursed.

4. HSA dollars could pay for some insurance premiums

You can pay premiums using HSAs in the following situations:

  • For COBRA coverage, when you lose your employer’s plan because of a job loss or reduced hours but want to pay the extra price to continue having it
  • For coverage while receiving unemployment benefits
  • If you’re age 65 or older, for coverage for Medicare Parts A, B, and D, and Medicare Advantage (but not Medigap premiums; note that once you are on Medicare, you can no longer contribute to your HSA)
  • If you’re age 65 or older, for coverage for employer-sponsored health insurance, including retiree health insurance costs
  • Any insurance premiums for which you do not claim a credit or deduction. Premiums ineligible for reimbursement would include: those deducted from a paycheck pre-tax, included as itemized medical expenses, or subsidized by the premium tax credit. For example, if gross premiums for a public marketplace plan are $15,000 and net premiums are $5,000, the $5,000 in net premiums can be reimbursed from the HSA, but the $10,000 already covered by the premium tax credit subsidy cannot be reimbursed.

Even though these circumstances are limited, using HSA money to foot the bill for health insurance while you’re not working could offer some relief.

5. Money in an HSA could be used penalty-free for non-medical expenses after age 65

Before you’re 65, HSA savings could go toward all the qualified expenses mentioned above. But starting at age 65, you can use savings in your HSA to pay for just about anything, penalty-free. One catch: You have to pay income tax on HSA dollars used for non-medical expenses, similar to withdrawals from a traditional IRA, even after age 65. And remember: HSA savings not used for qualified medical expenses before age 65 are subject to a 20% penalty, plus any applicable taxes.

6. You own your HSA, not the employer who sponsored your health plan

Your HSA is completely yours. It doesn’t belong to the employer who sponsored the HSA-eligible health plan. That means you could move the account to any offering financial company. Just check each company’s fees and investment options before picking a home for your HSA. Don’t yet have an HSA? See if you have an HSA-eligible health plan. If you do, you could open an HSA right away.

Consider a health savings account (HSA)

With an HSA, you can pay for qualified medical expenses in a tax-advantaged way.

More to explore

1. Kullgren, Jeffrey T. et al. “Use of Health Savings Accounts Among US Adults Enrolled in High-Deductible Health Plans,” JAMA network open vol. 3,7 e2011014, July 1, 2020.

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Views expressed are as of the date indicated, based on the information available at that time, and may change based on market or other conditions. Unless otherwise noted, the opinions provided are those of the speaker or author and not necessarily those of Fidelity Investments or its affiliates. Fidelity does not assume any duty to update any of the information.

The information provided here is general in nature. It is not intended, nor should it be construed, as legal or tax advice. Because the administration of an HSA is a taxpayer responsibility, customers should be strongly encouraged to consult their tax advisor before opening an HSA. Customers are also encouraged to review information available from the Internal Revenue Service (IRS) for taxpayers, which can be found on the IRS Web site at They can find IRS Publication 969, Health Savings Accounts and Other Tax-Favored Health Plans, and IRS Publication 502, Medical and Dental Expenses (including the Health Coverage Tax Credit),online, or you can call the IRS to request a copy of each at 800.829.3676.

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