How to Open an HSA (Health Savings Account)

How to Open an HSA: Everything You Need to Know

By Matthew Frankel, CFP – Updated May 2, 2025 at 9:02 PM

Key Points

HSAs offer tax savings for eligible high-deductible plan enrollees, growing funds tax-free.
Contributions to HSAs are tax-deductible, and funds can be invested and used for healthcare expenses.
From age 65, HSA funds can also serve as a retirement resource, even for non-medical expenses.

While there is more than one type of account that allows you to save for healthcare, the health savings account, or HSA, is the most advantageous for most who qualify.

Healthcare is expensive, and there's no reason to believe that will change anytime soon in the United States. In fact, U.S. healthcare spending grew to $4.9 trillion in 2023 (that's $14,570 per person), the most recent year for which we have complete data.

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An infographic explaining what a healthcare savings account (HSA) is and how it works. — Image source: The Motley Fool.

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Once you've opened an HSA, the next step is to make your contributions, which you can do in regular installments or in a lump sum.

The HSA contribution limits are adjusted annually to account for inflation, and it's worth noting that there have been legislative efforts to dramatically increase the amount of money that can be contributed to an HSA. But for 2025, the HSA contribution limits are as follows.

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2025 HSA contribution limits

For 2025, participants with individual health coverage can contribute as much as $4,300 to an HSA, and the limit for family coverage is rising to $8,550. There is a $1,000 catch-up allowance for account owners 55 or older.

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HSA paperwork with money on top. — Image source: Getty Images.

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This triple tax advantage is unique and can be very beneficial -- especially if you leave money in your HSA long enough to generate meaningful returns. No retirement accounts offer the ability to deduct contributions and take tax-free withdrawals of investment profits.

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About the Author

Matt Frankel, CFP, is a contributing Motley Fool stock market analyst and personal finance expert covering financial stocks, REITs, SPACs, and personal finance. Prior to The Motley Fool, Matt taught high school and college mathematics. He holds a bachelor’s degree in physics from the University of South Carolina, a master’s degree in mathematics from Nova Southeastern University, and a graduate certificate in financial planning from Florida State University. He won a SABEW award for coverage of the 2017 Tax Cuts and Jobs Act. He is also regularly interviewed by Cheddar, The National Desk, and other TV networks and publications for his financial, stock market, and investing expertise.

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