What is a Health Savings Account (HSA)?

A Health Savings Account (HSA) is a tax-advantaged savings and investment account that you can use to pay for qualified medical expenses. To contribute, you must be enrolled in a high-deductible health plan (HDHP). Contributions are tax-deductible, growth is tax-free, and withdrawals for qualified medical expenses are tax-free.

How does this HSA calculator work?

The HSA calculator estimates your annual tax savings and future HSA balance based on your contributions, employer match, expected investment return, and medical withdrawals. It applies the IRS annual contribution limits you select and compounds the balance each year, subtracting your estimated qualified medical expenses.

What are the HSA contribution limits?

HSA contribution limits are set annually by the IRS and depend on whether you have self-only or family HDHP coverage and your age. People age 55 or older can make an additional catch-up contribution. Always check the latest IRS Publication 969 or your HSA provider for current-year limits.

Can I use my HSA as a retirement account?

Yes. After age 65, you can withdraw HSA funds for any purpose without penalty. Withdrawals used for non-medical expenses are taxable as ordinary income, similar to a traditional IRA. If you keep using the funds for qualified medical expenses, withdrawals remain tax-free.

What tax rate should I enter in the calculator?

Use your combined marginal tax rate, including federal income tax and, if applicable, state income tax. Many people approximate this by adding their top federal bracket and state bracket. The higher your marginal rate, the more valuable HSA tax deductions become.

Are HSA contributions pre-tax or tax-deductible?

If contributions are made through payroll, they are usually pre-tax for federal income tax, Social Security, and Medicare. If you contribute directly to the HSA, you can deduct the amount on your tax return, even if you do not itemize deductions.

HSA Calculator – Health Savings Account Planner

Estimate how much your Health Savings Account (HSA) could grow, how much tax you save each year, and how much you might have available for medical costs in retirement.

1. Profile & Coverage

Current age

Planned retirement age

HDHP coverage type

Self-only Family

Used to show typical IRS contribution limits (you can override below).

Combined marginal tax rate (%)

Approximate federal + state marginal rate. Used to estimate annual tax savings.

2. Contributions & Returns

Current HSA balance ($)

Your annual contribution ($)

Includes payroll and direct contributions. Make sure total stays within IRS limits.

Employer annual contribution ($)

Annual qualified medical spending from HSA ($)

Average amount you expect to withdraw each year for eligible expenses.

Expected annual investment return (%)

Long-term average after fees. HSAs invested in cash may earn much less.

Include age 55+ catch-up contributions

Results summary

Years until retirement

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Total contributions (you + employer)

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Estimated investment growth

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Estimated withdrawals for medical expenses

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Projected HSA balance at retirement

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Estimated annual tax savings

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≈ $– total through retirement

Show year‑by‑year HSA projection

Year	Start balance	Contributions	Withdrawals	Growth	End balance

How this HSA calculator works

This tool models your Health Savings Account (HSA) as a tax-advantaged investment account that you fund each year while enrolled in a high-deductible health plan (HDHP).

For each year until your planned retirement age, the calculator:

Adds your annual contribution plus any employer contribution.
Subtracts your estimated qualified medical withdrawals.
Applies your expected annual investment return to the remaining balance.

Yearly HSA balance update

Let:

B_t = balance at start of year t
C = total contributions during year (you + employer)
W = withdrawals for qualified medical expenses
r = annual investment return (decimal)

Then:

B_{t+1} = (B_t + C - W) × (1 + r)

Tax savings are estimated as:

Annual tax savings ≈ (Your contribution) × (Marginal tax rate)

Key assumptions

Contribution limits and HDHP eligibility are not enforced automatically; you can override amounts to explore “what‑if” scenarios.
Investment returns are assumed to be constant each year (real markets are volatile).
Medical withdrawals are assumed to be qualified expenses, so no tax or penalty is applied.
Tax savings are based on your current marginal rate and do not change over time.

Typical HSA contribution limits

Actual HSA limits change annually and depend on IRS rules. As a reference only (not automatically applied by the calculator):

Self‑only HDHP coverage – lower annual limit.
Family HDHP coverage – higher annual limit.
Age 55+ – additional catch‑up contribution allowed.

Always confirm the current‑year limits in IRS Publication 969 or with your HSA provider.

Using your HSA as a long‑term wealth tool

Because HSAs offer a “triple tax advantage” (tax‑deductible contributions, tax‑free growth, and tax‑free withdrawals for qualified medical expenses), they can be powerful for long‑term planning:

Short‑term: Pay current medical bills tax‑free.
Medium‑term: Let funds grow and reimburse yourself later for past qualified expenses (if you kept receipts).
Retirement: Use the balance for Medicare premiums, out‑of‑pocket healthcare, and other qualified costs. After age 65, non‑medical withdrawals are allowed without penalty (but are taxable as income).

Interpreting your results

Projected HSA balance at retirement: How much you may have available for healthcare costs in retirement if you follow the plan you entered.
Estimated investment growth: The portion of your final balance that comes from compounding, not contributions.
Estimated tax savings: How much income tax you avoid by contributing to an HSA instead of taking the same amount as taxable income.

This calculator is for educational purposes only and does not provide tax, legal, or investment advice. HSA rules are complex and change over time. Always confirm details with the IRS, your HSA provider, or a qualified professional.

Frequently asked questions about HSAs

Who is eligible to contribute to an HSA?

To be eligible, you generally must:

Be enrolled in a qualifying high‑deductible health plan (HDHP).
Have no other disqualifying health coverage (such as a general‑purpose FSA that covers your medical expenses before the HDHP deductible).
Not be enrolled in Medicare.
Not be claimed as a dependent on someone else’s tax return.

What happens if I contribute more than the HSA limit?

Excess contributions may be subject to a 6% excise tax each year until corrected. You can usually fix this by withdrawing the excess (and any earnings on it) before the tax filing deadline. Check IRS rules or consult a tax professional.

Can I invest my HSA funds?

Many HSA providers allow you to invest once your cash balance exceeds a certain threshold. Investment options vary (mutual funds, ETFs, etc.) and carry risk. Higher expected returns can significantly increase your projected HSA balance, but also increase volatility.

What if I change jobs or health plans?

Your HSA is yours, not your employer’s. You keep the account if you change jobs or health plans. You can no longer contribute in months when you are not HSA‑eligible, but the existing balance can still be used for qualified medical expenses.

Are HSA withdrawals ever penalized?

Withdrawals for non‑qualified expenses before age 65 are generally subject to income tax plus a 20% penalty. After age 65, non‑qualified withdrawals are taxed as income but no longer penalized.