This Simple HSA Move Could Boost Your Long-Term Savings

Got a health savings account (HSA)? You can do yourself a big favor by paying for medical expenses out-of-pocket now and delaying reimbursement.

Here’s how the strategy works: rather than pay for medical expenses with your HSA funds, you invest your HSA money, and pay off any current medical expenses with cash. You then let your invested money grow over time, which allows you to benefit from the power of compound interest.

Just be sure to hold on to your receipts for any medical expenses you incur. Later on, you can use those receipts to get reimbursed for your past medical expenses. Plus, since HSAs offer a triple tax advantage—where contributions are tax-deductible, funds grow tax-free, and withdrawals are tax-free when used for qualified medical expenses—you’ll save money on taxes, too.

Contributing to a Health Savings Account

Before you can contribute to an HSA, you’ll need to sign up for a high-deductible healthcare plan, or a type of insurance plan with a high deductible and lower premiums.

How high are the deductibles for these insurance plans? For individuals, the deductible must be $1,650 or higher. For families, it’s $3,300 or more.

There are limits to how much you can invest in a HSA, but your contributions will roll over each year. This means you won’t have to worry about losing any funds that you don’t use.

For 2025, the contribution limit is $4,300 for individuals. If you have a high-deductible health plan for your family, the contribution limit is $8,550. And if you are 55 or older, you can make a catch-up contribution of $1,000.

When it comes to taking advantage of the delayed reimbursement strategy, pay medical costs out-of-pocket whenever you can—use a check, credit card, or debit card to pay, but leave your HSA untouched. The longer you wait to reimburse yourself, the more time the money has to grow. And once you’re age 65 or older, you can use your HSA money for non-medical expenses without having to pay the 20% penalty—though you will still have to pay income tax.

The Bottom Line

HSAs already have some nifty tax advantages. Another way to use the account to your advantage is by waiting to be reimbursed and investing your HSA money. After you pay for current medical expenses, delay receiving the reimbursement This delay will give the money you have invested in a HSA additional time to grow.