How HSAs work

The details of how a health savings account (HSA) works and the benefits it can provide can be explained with four simple words: deposit, grow, save and pay.

What you need to know

Deposit your health care dollars.
  • Deposits — While you are participating in a qualifying high-deductible health plan, anyone can make a deposit into your HSA — you, your employer, your family or any other individual. Your employer may arrange for deposits to be deducted from your paycheck. Other options include deposit forms, the HSA administrator’s website and online transfers from your bank.
  • Contribution limits — The IRS sets guidelines for how much you can contribute to an HSA each year.
     See annual contribution limits
Grow your savings.
  • Earnings — Deposits to your HSA could earn income tax-free interest.
  • Investment options* —Some HSAs offer an option to invest some of your HSA dollars in mutual funds after you have saved a certain amount in your account — if that fits your risk tolerance and long-term goals.
     Learn how to invest with HSAs
  • Carry-over — There is no “use it or lose it” rule for HSAs. Unspent funds remain in your account.
Save on taxes
  • Contributions — The money you contribute to your HSA is tax-deductible up to the annual contribution limit. So, if you are in the 28% tax bracket and deposit $3,000 into your HSA, you could save $840 in federal income taxes.
  • Distributions — Money you take out of your HSA to pay for qualified medical expenses is tax-free.
  • Earnings — Interest you may earn on your HSA grows income tax free.
Pay for health care, now or later
  • Qualified medical expenses — Pay for current and future medical expenses for you, your spouse and your eligible dependents. You can continue to use the funds in your account even if you stop participating in a high-deductible health plan (although you cannot contribute more to it).
     Learn more about qualified medical expenses
  • Payment methods — Some HSAs offer a debit card you can use to pay pharmacies, doctors, clinics and other health care providers on the spot. Or, you can withdraw funds to reimburse yourself for out-of-pocket expenses.
  • Tax implications — It’s up to you to maintain records to verify that funds were used for qualified medical expenses. Funds used for nonqualified expenses will be taxed as income and subject to a 20 percent penalty. If you are 65 and older, the 20 percent penalty does not apply.
     Visit our HSA Tax Center
Open an HSA today

If you have or choose a high-deductible health plan, make a health-wise investment by adding an HSA. Your employer may offer an HSA as part of your health and wellness benefits. Or, if you're eligible, you can open one on your own.

Enroll Now


Use our HSA calculators to estimate contribution potential, tax savings and future value.
 Calculate the value of an HSA


Learn how an HSA compares to an HRA and FSA, and decide which option is best for you and your family.
 Compare health accounts


Contact an Optum sales representative to learn more about offering HSAs to your employees.

 Contact Us Form

Investments are not FDIC-insured, are not guaranteed by Optum Bank and may lose value.