If your goal is to save money in a tax-advantaged manner, there are a number of different accounts you can look at.
A traditional IRA or 401(k), for example, allows you to make pre-tax contributions, and your investments get to grow on a tax-deferred basis. With a Roth 401(k) or IRA, your investment gains are tax-free, and withdrawals are tax-free as well.
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Health savings accounts, or HSAs, are a fantastic savings tool because they combine the benefits of traditional and Roth retirement accounts. With an HSA:
- Contributions are tax-free
- Investment gains are tax-free
- Withdrawals are tax-free provided the money is used for qualifying healthcare expenses
If you're planning to participate in an HSA in 2026, it's important to make the most of that account. Here's how.
1. Remember to make catch-ups
Once you turn 50, you're eligible to make catch-up contributions in an IRA or 401(k) plan. The rules for HSAs are a bit different in that catch-ups don't begin until age 55.
But if you'll be turning 55 at any point in 2026 -- even the very last day of the year -- you're eligible to put an extra $1,000 into your HSA. That's an option it pays to exercise if you can afford to do so.
As a reminder, if you're under 55, HSA contributions max out at $4,400 for self-only coverage in 2026 and $8,750 for family coverage. But the more money you put into that account, the more 2026 income you can shield from taxes -- and the more you stand to have available for healthcare expenses later on.
2. Don't use your money right away
The nice thing about HSAs is that you can use your funds at any point in time. There's no penalty for taking withdrawals right away, and there's no deadline to use up your balance.
But if you want to get better mileage out of your HSA, it pays to not use it in 2026. Instead, if you can swing it, pay for medical bills with other funds and let your HSA grow into a larger sum over time.
You may especially want to reserve your HSA balance for retirement. At that stage of your life, your healthcare costs may be higher due to age-related issues that arise.
Plus, there are many costs Medicare enrollees face regularly, from hefty deductibles to constant copays. So the more money your HSA has at that point in time, the less financially stressful your retirement might be.
3. Know the rules once you turn 65
If you have an HSA and are turning 65 in 2026, it's important that you recognize a big change in how these accounts work.
Prior to age 65, HSA withdrawals taken for non-medical spending incur a 20% penalty. But once you turn 65, that penalty goes away. That means you can use your HSA for any purpose whatsoever.
Now you should know that if you take an HSA withdrawal for a non-medical reason, that money will be taxed. But there's a difference between that and an actual penalty.
It could still pay to reserve your HSA for healthcare expenses only if you're first turning 65. At that point, you may have a lot of retirement years ahead of you -- and lot of medical bills to cover.
But if you need money in a pinch for something else, or you have a very large HSA balance you don't think you'll spend on healthcare in your lifetime, then know that you have the flexibility to use those funds for other purposes.
The more you know about how HSAs work, the better yours can serve you. Keep these points in mind as we head into 2026 so you can make the most of your HSA.
