Take full advantage of your Health Savings Account (HSA) to stay ahead of health care expenses this year and plan for retirement.
Find out how to get the maximum benefit from your account, from saving on taxes to planning for health care in retirement. Register now
Already have an HSA Explore this interactive experience to learn how to do more with your HSA to build your balance for the future.
Make HSA investing part of my longer-term financial strategy 1
Be prepared to pay for any unanticipated health care expenses
Plan for health care expenses in retirement
Maximize contributions to my HSA to reduce my payroll taxes
Build tax-free wealth by investing a portion of my HSA 1
Keep some in cash and invest the rest 3
Prepare for health care in retirement
Spend less to save more
Works with HDHP to save money on premiums
If the money you set aside in your HSA is just sitting in cash, you may be missing out on the opportunity to build tax-free wealth for your future. Consider investing a portion of your account in mutual funds offered through your HSA's investment feature for long-term growth potential.
You can set up the automatic investment feature at any time, allowing funds from your cash account to automatically transfer to your investment account, while maintaining a minimum balance in your cash account to pay for short-term qualified expenses.
Triple tax advantages 1
Did you know that a couple retiring at age 65 today could need a much as $296,000 to pay for health care in retirement? 5 Some people are planning to use their 401(k) to pay for health care in retirement, however they will have to pay tax on withdrawals for qualified medical expenses. Based on the estimated $296,000 needed, the tax impact could be about $74,000, assuming a 20% tax rate.
This is why using your HSA to save and pay for health care in retirement can be a smart strategy. You won't pay taxes on HSA withdrawals used for qualified health care expenses, offering greater buying power for health care in retirement.
No use it or lose it rule 2
Funds in your HSA at the end of the year roll over year after year allowing you to build your balance for when you need it, like in retirement. One way to help preserve your balance and take advantage of tax-free growth potential is to make a conscious decision to spend less from your HSA each year. If you can afford to, set an amount, such as $50 or $100, that you are willing to spend on health care out of your monthly budget before dipping into your HSA.
Watch to see how Ashley, who is just starting her career, plans to use her HSA.
Watch to see how Rob manages health care costs for his family.
Watch to see how Leigh is planning for health care as she nears retirement.
1 Potential Tax Advantages: You can receive tax-free distributions from your HSA to pay or be reimbursed for qualified medical expenses you incur after you establish the HSA. If you receive distributions for other reasons, the amount you withdraw will be subject to income tax and may be subject to an additional 20% tax, unless an exception applies. Any interest or earnings on the assets in the account are federal income tax-free. You may be able to claim a tax deduction for contributions you, or someone other than your employer, make to your HSA directly (not through payroll deductions). In addition, HSA contributions may reduce your state income taxes in certain states. Certain limits may apply to employees who are considered highly compensated key employees. Bank of America recommends you contact qualified tax or legal counsel before establishing an HSA.
2 "Never Lose it" refers to account portability and annual rollover of accumulated assets; it does not imply you cannot lose money. The investment portion of the HSA account is not FDIC insured, not bank guaranteed and may lose value.
3 Investing involves risk. There is always the potential of losing money when you invest in securities. Please consult with your independent attorney, tax advisor and financial advisor for final recommendations before changing or implementing any financial strategy.
4 Medpac, July 2020 Data Book: Health Care Spending and the Medicare Program. Total spending on health care services for noninstitutionalized fee-for-service Medicare beneficiaries.
5 Sources: Employee Benefits Research Institute, Issue Brief, no. 549, January 20, 2022. A 65-year-old couple, both with median drug expenses needs $296,000 to have a 90% chance of having enough money to cover health care expenses (excluding long-term care) in retirement. Savings needed for Medigap Premiums, Medicare Part B Premiums, Medicare Part D Premiums and Out-of-Pocket Drug Expenses for Retirement at age 65 in 2021.
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About Triple Tax Advantages: You can receive tax-free distributions from your HSA to pay or be reimbursed for qualified medical expenses you incur after you establish the HSA. If you receive distributions for other reasons, the amount you withdraw will be subject to income tax and may be subject to an additional 20% tax. Any interest or earnings on the assets in the account are tax free. You may be able to claim a tax deduction for contributions you, or someone other tahn your employer, make to your HSA. Bank of America recommends you contact qualified tax or legal counsel before establishing an HSA.
Bank of America makes available The HSA for Life® Health Savings Account as a custodian only. The HSA for Life is intended to qualify as a Health Savings Account as set forth in Internal Revenue Code Section 223. However, the account beneficiary that establishes the HSA is solely responsible for ensuring that he/she satisfies the Health Savings Account eligibility requirements set forth in Section 223. If an individual/employee establishes a Health Savings Account and he/she is not otherwise eligible, he/she will be subject to adverse tax consequences. In addition, an employer who makes contributions to an HSA of an ineligible individual may also be subject to adverse tax consequences. We recommend that HSA applicants and/or employers contact qualified tax or legal counsel before establishing a Health Savings Account.
Bank of America does not sponsor or maintain the Flexible Spending Accounts or Health Reimbursement Arrangements that you establish. Those programs are sponsored and maintained solely by the employer. Bank of America is nothing more than a claims administrator who performs ministerial administrative tasks with respect to such arrangements pursuant to agreement with the employer. The employer is solely responsible for ensuring that such arrangements comply with all applicable laws.
The planning tools and information calculators are illustrative only, and accuracy is not guaranteed. They are intended to provide a comparative tool for various consumer health care options and potential costs and savings of those options. Bank of America and its affiliates are not tax or legal advisors. The calculators are not intended to offer any tax, legal or financial advice and do not assure the availability of or your eligibility for any specific product offered by Bank of America or its affiliates. Please consult with qualified professionals to discuss your situation. This site may contain links to third-party content, which may be articles, videos, or calculators, regarding health plans only as a convenience. Some articles, videos and calculators may have been written and produced by third parties not affiliated with Bank of America or any of its affiliates.
Neither Bank of America nor any of its affiliates provide legal, tax, accounting or benefits consulting advice. Please consult with your own attorney or tax advisor to understand the tax and legal consequences of your HSA, Health FSA and/or HRA plan or program offerings to your employees and your particular situation in your capacity as employer and/or plan administrator. This material should be regarded as general information on health care considerations and is not intended to provide specific health care advice.
All trademarks and service marks belong to Bank of America Corporation unless otherwise noted.
Investing in securities involves risks, and there is always the potential of losing money when you invest in securities.
Bank of America, N.A., Member FDIC.
Mutual Fund investment offerings for the Bank of America HSA are made available by Merrill Lynch, Pierce, Fenner & Smith Incorporated (“MLPF&S”), a registered broker-dealer, registered investment adviser, Member SIPC, and a wholly owned subsidiary of Bank of America Corporation (“BofA Corp.”). Investments in mutual funds are held in an omnibus account at MLPF&S in the name of Bank of America, N.A., for the benefit of all HSA account owners. Recommendations as to HSA investment menu options are provided to Bank of America, N.A. by the Chief Investment Office (“CIO”), Global Wealth & Investment Management (“GWIM”), a division of BofA Corp. The CIO, which provides investment strategies, due diligence, portfolio construction guidance and wealth management solutions for GWIM clients, is part of the Investment Solutions Group (ISG) of GWIM.
MLPF&S makes available certain investment products sponsored, managed, distributed or provided by companies that are affiliates of BofA Corp.
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