HSA Calculator

Three Federal HSA Tax Benefits

Eligible contributions receive federal tax relief, investment earnings grow without annual federal tax, and qualified medical withdrawals are federally tax-free. These are three treatments of the same funds; adding them together does not produce a separate total tax benefit. After age 65, non-medical withdrawals are subject to income tax without the additional 20% tax.

This is a marginal-rate illustration, not a tax-return calculation. State HSA treatment varies; use an applicable savings rate. Ordinary after-tax payroll deductions and direct contributions do not receive section 125 payroll-tax relief. The 7.65% option assumes the contribution reduces wages otherwise subject to both Social Security and Medicare taxes; no Additional Medicare Tax calculation is included.

2026 HDHP Eligibility Requirements (Plus OBBBA Expansion)

To contribute to an HSA, you must be enrolled in an HSA-eligible high-deductible health plan (HDHP) and meet the other eligibility rules. From January 1, 2026: individual-market bronze and catastrophic coverage available through an ACA Exchange is treated as an HDHP, including qualifying off-Exchange counterparts. Other coverage, Medicare, and dependency rules still apply.

Eligible Plans and Compatible Coverage for 2026

• Traditional HSA-qualified HDHP (employer-sponsored or marketplace) — meets the applicable deductible, out-of-pocket, and coverage requirements
• NEW: ACA Bronze plans (individual coverage on the marketplace) — even if their deductible is lower than $1,700
• NEW: ACA Catastrophic plans — typically for under-30 enrollees
• Direct Primary Care Service Arrangements (DPCSAs) — compatible coverage when the statutory service restrictions and aggregate $150/mo individual or $300/mo multi-person fee limits are met; it does not replace an eligible plan
• Telehealth and remote care benefits — permanent safe harbor for plan years beginning after 2024; it does not replace eligible health coverage

Sources: IRS Rev. Proc. 2025-19 (2026 limits), IRS Notice 2026-5 (coverage changes), and Publication 969 (general HSA rules). The calculator prorates by eligible months and does not apply the last-month rule, testing-period exceptions, or midyear coverage changes.

Long-Term HSA Growth — The Stealth Retirement Account

If you invest your HSA balance and pay current medical expenses out-of-pocket (saving receipts to reimburse later, tax-free), the HSA compounds for decades inside a triple-tax-advantaged wrapper. The numbers below show the power of consistent maximum contributions.

Assumes 7% nominal annual return, contributions made at year-end, no starting balance or medical withdrawals, no employer contributions, and 2026 limits held constant. Returns are assumptions, not forecasts; future limits and eligibility can change.

Growth figures are calculator examples at a constant 7% nominal return. They do not establish a guaranteed retirement balance or future healthcare budget. General contribution and reimbursement rules: IRS Publication 969.

HSA vs 401(k) — Where Your Next Dollar Should Go

Most personal-finance frameworks recommend the contribution priority: (1) 401(k) up to employer match, (2) HSA to max, (3) 401(k) to max, (4) Roth IRA / taxable. Your employer match, medical costs, liquidity, coverage, and future tax rates can change the priority.

When 401(k) beats HSA

• Up to employer match. A 50% employer match adds $0.50 per eligible $1 contributed, subject to plan matching and vesting rules. Compare that benefit before diverting contributions.
• If you can't afford an HDHP. A high deductible only works if you can absorb $1,700-$8,500 in unexpected medical costs. If a surgery would force credit-card debt, a low-deductible plan + 401(k) is wiser.
• If you have chronic high medical needs. The HDHP itself may cost you more out-of-pocket than the HSA tax savings recoup.

Investment Threshold — When Does Your HSA Start Investing?

Cash thresholds, investment menus, account charges, and employer arrangements vary. Compare your account's current terms before choosing how much to invest, and retain enough accessible cash for near-term medical costs.

The transfer-out trick

If your employer-provided HSA has high fees or poor investment options, the IRS allows once-per-year HSA-to-HSA rollovers (60-day window) and unlimited trustee-to-trustee transfers. An eligible section 125 salary-reduction arrangement can provide payroll-tax relief. Compare the receiving account's current fees and investment terms before arranging transfers; transfers do not create new contribution room.

Account terms are plan-specific. Rollovers and trustee-to-trustee transfers have different rules; see IRS Publication 969 and your custodian's instructions.