Health Savings Account (HSA)
An HSA is a special account designed to pay for medical expenses, but when used wisely, it can also become one of the most powerful long term retirement tools.
What Is an HSA?
HSA stands for Health Savings Account. It is an account you can use to save and invest money for health care costs. To open and use one, you must be covered by a specific type of health insurance plan.
The simple version:
An HSA helps you save money for medical expenses, and if you do not need the money right away, you can invest it for the future.
Why HSAs Are Unique
Money in an HSA can be used for qualified medical expenses, like doctor visits, prescriptions, and other approved health costs.
If you do not spend the money right away, many HSAs allow you to invest it, letting it grow over time instead of sitting idle.
Why Some People Treat HSAs Like Retirement Accounts
Medical costs are a major expense later in life. Because of this, some people use HSAs as a long term savings tool rather than spending the money immediately.
Health care costs tend to increase as people age
Money you do not spend can stay invested for decades
Future medical expenses can be paid from the account
It adds flexibility alongside traditional retirement accounts
What to Watch Out For
HSAs have strict rules
You can only contribute to an HSA if you have an eligible health insurance plan. Using the money for non medical expenses can result in penalties.
Teen friendly rule:
Think of an HSA as a tool you may use later in life, not something most teens need to open right now.
Key Takeaway
A Health Savings Account is designed for medical expenses, but it can also be a powerful long term savings tool. The key is understanding the rules and using it intentionally as part of a bigger financial plan.