With so many health care acronyms floating around, it’s easy to get lost. But here’s one pair worth knowing: HDHPs and HSAs. Together, they can give you more control over your health care spending, and even help you save for the future.
HDHPs and HSAs
If your employer offers you a High-Deductible Health Plan (HDHP), there’s a good chance that you may also be eligible for a Health Savings Account (HSA).
A health plan must meet specific Internal Revenue Service (IRS) mandated deductible and out-of-pocket limits to be considered an HDHP. The 2025 and 2026 amounts are shown below.
| 2025 HDHP Requirements | Self-only Coverage | Family Coverage |
| Minimum Deductible | $1,650 | $3,300 |
| Maximum Out of Pocket | $8,300 | $16,600 |
| HSA Contribution Limit | $4,300 | $8,550 |
| 2026 HDHP Requirements | Self-only Coverage | Family Coverage |
| Minimum Deductible | $1,700 | $3,400 |
| Maximum Out of Pocket | $8,500 | $17,000 |
| HSA Contribution Limit | $4,400 | $8,750 |
Individuals aged 55 and older can contribute $1,000 additional each year, whether they have self-only or family coverage.
Individuals with an HDHP can use an HSA to pay for a variety of medical, dental, and other health services. Over-the-counter medications and other expenses may also qualify as HSA expenses under a provision of the Coronavirus Aid, Relief, and Economic Security (CARES) Act. Visit the IRS Newsroom for more information.
You cannot contribute to an HSA if any of the following apply:
- Other health coverage: You are covered by a non-HDHP, such as a traditional health plan or a general-purpose Flexible Spending Account (FSA).
- Medicare enrollment: You are enrolled in Medicare Part A or Part B.
- Dependent status: You are claimed as a dependent on someone else’s tax return.
- Disqualifying secondary insurance: You have secondary insurance that pays for non-preventive care before you meet your deductible.
Money you put into a Health Savings Account (HSA) usually isn’t taxed — not by the federal government, and in most cases, not by your state either. Even better? The money in your account grows tax-free, and you won’t pay taxes when you take it out as long as you use it for qualified medical expenses.
And here’s another perk: any money you don’t use rolls over year after year. That means your savings can keep building for future health costs.
You can open an HSA through your employer or on your own with a bank or other financial institution. Bankrate.com even has a helpful list of HSA providers if you’re looking for one.
If you ever change jobs, no problem. Your HSA goes with you. It’s your money, and you keep it. Once you turn 65, you can even use those funds to help with retirement. Just remember, if you use the money for something other than medical expenses, it’ll be taxed like regular income.
FSAs
A Flexible Spending Account (FSA) is a special account offered through your employer that helps you save money on certain health or dependent care costs. You can set aside money from your paycheck before taxes are taken out, which means you’ll pay less in taxable income overall.
But here’s the key difference from an HSA: FSAs are “use it or lose it” accounts. That means you’ll want to spend the money in your account before the deadline. Some plans give you a short grace period — up to two and a half months — to use any leftover funds. That’s different from what’s called a Run-Out Period, which gives you extra time (up to 90 days) to file claims for expenses from the previous year.
FSAs are only available through your employer. You can’t open one on your own if you’re self-employed or between jobs. And if you leave your job, your FSA doesn’t go with you. Any remaining funds go back to your employer, so it’s best to plan ahead and use what you’ve set aside.
| Contribution Limits for Flexible Spending Accounts (FSAs) | |||
| Health FSAs | Dependent Care FSAs | Carryover Limit | |
| 2025 | $3,300 | $5,000 ($2,500 if married and filing separately) | Up to $660 can be carried over to 2026 at your employer’s discretion |
| 2026 | $3,400 | $7,500 ($3,750 if married and filing separately); for taxable years beginning after 2025) | Up to $680 can be carried over to 2027 at your employer’s discretion |
Making the Right Choice
Planning for health care costs isn’t always simple. They can be tough to predict. (Dependent care costs, on the other hand, are often a bit easier to estimate.) A good place to start is by looking at your health expenses from the past year or two. That can help you get a sense of what you might spend in the future. You can also check in with your doctor about any upcoming treatments or care you might want to budget for.
Because HSA funds don’t expire at the end of the year, many employees find them more flexible than FSAs. Read the 2025 AARP article, Here Is Your Secret Tax Weapon for Saving for Retirement, or NerdWallet’s Flexible Spending Account (FSA) Explained, for further guidance.