Key Takeaways
- An HSA offers a “triple tax advantage.” Contributions can be made on a pre-tax basis (or are tax-deductible). Earnings can grow tax deferred. And withdrawals are tax free when they're used for qualified medical expenses.
- If you have the ability to cover your current health care expenses from your regular savings, leaving HSA money invested allows it to potentially grow over time.
- Beginning at age 65, withdrawals for non-qualified medical expenses are also penalty-free—but are taxed as ordinary income, like a traditional IRA.