Quick answer
An HSA is the only US account that is tax-free going in, growing and coming out for medical costs. Contributing the 2026 self-only maximum of $4,400 a year for 20 years at a 7% return, from a $5,000 starting balance, builds about $199,729 — and a 22% bracket saver avoids roughly $49,572 of tax across the contributions, the payroll tax and the growth.
How the HSA Triple Tax Advantage works, step by step
Enter your annual contribution, current balance, expected return, years and marginal tax bracket. The calculator compounds the account annually at your return, then quantifies the tax you avoided in three separate lines: income tax on the contributions, payroll tax on contributions made through an employer plan, and income tax on the investment growth.
The 'triple' advantage is literal. Contributions through payroll also escape Social Security and Medicare tax (7.65%), which even a 401(k) contribution does not. Growth is untaxed. Withdrawals for qualified medical expenses — dental, vision, prescriptions, most care, and Medicare premiums after 65 — are untaxed. On a $4,400 annual contribution in the 22% bracket, the payroll route saves about $1,305 of tax in the first year alone.
For 2026 the IRS limits are $4,400 for self-only coverage and $8,750 for family coverage, plus a $1,000 catch-up at age 55 or older (IRS Revenue Procedure 2025-19). The qualifying high-deductible plan must have a minimum deductible of $1,700 self-only or $3,400 family, and an out-of-pocket maximum no higher than $8,500 self-only or $17,000 family. Employer contributions count toward the same limit.
The strategy the calculator prices is paying current medical bills from cash flow, saving the receipts, and letting the HSA invest for decades. There is no deadline for reimbursing yourself for an expense incurred while the HSA existed, so the account can be tapped tax-free in retirement against a drawer of old receipts — the growth then compounds on money that was never taxed at any stage.
The advantage depends on investing, not just saving. Most providers require a minimum cash balance (often $1,000 to $2,000) and let you invest the rest in mutual funds or ETFs. An HSA left in a low-interest sweep account for 20 years forfeits most of the growth the calculator shows, and the growth line is where the largest single tax saving sits — $23,480 of the $49,572 total in the worked example.
The formula
Projected value = Balance × (1 + r)^years + Annual contribution × [((1 + r)^years − 1) ÷ r]. Tax saved = contributions × bracket + contributions × 7.65% (payroll) + growth × bracket.
Worked example — try it on the calculator above
Worked example: $4,400 a year for 20 years at 7%, 22% bracket
Starting balance $5,000. Contributions total $88,000 over 20 years, so $93,000 goes in. Compounded annually at 7%, the account reaches about $199,729 — growth of roughly $106,729. Tax saved: $19,360 of income tax on the contributions, $6,732 of payroll tax (7.65% on $88,000), and $23,480 of income tax on the growth, for a total of about $49,572. The same growth in a brokerage account would owe capital gains tax, and in a traditional 401(k) full income tax on withdrawal. A family contributing the $8,750 maximum on the same terms reaches about $378,059.
Frequently Asked Questions
What are the HSA contribution limits for 2026?
For 2026: $4,400 for self-only coverage and $8,750 for family coverage, plus a $1,000 catch-up at 55 or older, per IRS Revenue Procedure 2025-19. You must be enrolled in an HSA-qualifying high-deductible health plan and have no other disqualifying coverage. Employer contributions count toward the same limit.
Can I invest HSA money or must it sit in cash?
You can invest it. Most providers require a minimum cash balance (often $1,000 to $2,000) and let you invest the rest in mutual funds or ETFs. The long-horizon strategy only works if the money is invested; an HSA left in a low-interest sweep account for 20 years forfeits most of the advantage the calculator shows.
What happens to an HSA at age 65?
It becomes more flexible: withdrawals for non-medical expenses are taxed as ordinary income — like a traditional IRA — with no penalty after 65. Medicare premiums can be paid from an HSA tax-free. You can no longer contribute once enrolled in Medicare.
Do HSA balances expire or get forfeited?
No. Unlike a flexible spending account, an HSA is yours permanently, rolls over every year, and moves with you between employers. There is no use-it-or-lose-it rule and no deadline on reimbursing eligible expenses you paid out of pocket, provided the expense came after the HSA was established.
Estimates, not advice. This calculator provides educational estimates based on the inputs you enter and the assumptions shown on this page. It is not financial, tax or investment advice, and it cannot see your full situation. Verify important figures against official sources, and consider a qualified professional for decisions about your own money. See our Disclaimer and Methodology.