crs_reports: R45277

Congressional Research Service reports with summaries, authors, and topic classifications.

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R45277 Health Savings Accounts (HSAs) 2026-02-23T05:00:00Z 2026-02-24T16:37:55Z Active Reports Ryan J. Rosso, Alice Y. Choi Individual Tax, Private Health Insurance A health savings account (HSA) is a tax-advantaged account that individuals can use to save and pay for unreimbursed medical expenses (e.g., deductibles, co-payments, coinsurance, and services not covered by insurance). Although eligibility to contribute to an HSA is associated with enrollment in a high-deductible health plan (HDHP), an HSA is a trust/custodial account and is not health insurance. HSAs have several tax advantages: individual contributions are tax deductible unless made through a cafeteria plan; employer contributions and individual contributions made through a cafeteria plan are excluded from taxable income and from Social Security, Medicare, and unemployment insurance taxes; account earnings are tax exempt; and withdrawals are not taxed if used for qualified medical expenses. Individuals may establish and contribute to an HSA for each month that they are covered under an HSA-qualified HDHP, or a bronze or catastrophic plan available through an individual exchange. Individuals also must not have disqualifying coverage, and cannot be claimed as a dependent on another person’s tax return. The account is tied to the individual and account holders retain access to their accounts (and can keep using HSA funds) if they change employers, insurers, or subsequently become ineligible to contribute to the HSA. To be considered an HSA-qualified HDHP, a health plan must meet several tests: it must have a deductible above a certain minimum threshold, it must limit total annual out-of-pocket expenditures for covered benefits to no more than a certain maximum threshold, and it can cover only preventive care services, certain insulin products, and telehealth and other remote care before the deductible is met. In 2026, HSA-qualified HDHPs must have a minimum deductible of $1,700 for self-only coverage and $3,400 for family coverage and an annual limit on out-of-pocket expenditures for covered benefits that does not exceed $8,500 and $17,000, respectively. These amounts are adjusted for inflation (rounded to the nearest $50) annually. If an individual is eligible to contribute to an HSA any time during a given tax year, the total amount that individual may contribute to his or her HSA is capped. Generally, the maximum amount an individual may contribute to his or her HSA in a tax year is based on the months during the year that he or she was considered HSA eligible; the type of coverage the individual had during those months (self-only or family); and the individual’s age (those aged 55 or older are allowed additional catch-up contributions). For 2026, the maximum annual contribution limit amounts are $4,400 and $8,750, respectively. For those aged 55 or older, the maximum annual amount an individual can contribute to his or her HSA is increased by $1,000. Individuals may have lower contribution limits if they were not HSA eligible for the entire year. Individuals may make tax-free HSA withdrawals to pay for the qualified medical expenses for the account holder, the account holder’s spouse, or the account holder’s dependents. Qualified medical expenses include the costs of diagnosis, cure, mitigation, treatment, or prevention of disease and the costs for treatments affecting any part of the body; the amounts paid for transportation to receive medical care; and qualified long-term care services. HSA qualified medical expenses also include menstrual care products, and over-the-counter medications and drugs (without a prescription). Health insurance premiums generally are not considered qualifying medical expenses (except in limited circumstances). Withdrawals not used to pay for qualified medical expenses must be included in an individual’s gross income when determining federal income taxes and generally are subject to a 20% penalty. Individuals do not need to be enrolled in an HSA-eligible plan to make withdrawals from an HSA. For tax year 2021, the IRS reported that 12.1 million tax returns (7.5%) included HSAs with employer contributions and 2 million tax returns (1.2% of filed tax returns) included HSAs with individual contributions. Employer contributions include both direct employer contributions and employee pre-tax contributions through a cafeteria plan. Individual contributions are those made by or on behalf of an individual, excluding employer involvement. These categories are not mutually exclusive, as a single tax return may report both types of contributions. Furthermore, these data are at the tax return level (not individual) and do not account for individuals who were eligible to contribute to an HSA in 2021 but did not do so. https://www.congress.gov/crs_external_products/R/PDF/R45277/R45277.11.pdf https://www.congress.gov/crs_external_products/R/HTML/R45277.html

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