“Whether or not the contributions are saved or spent, an H.S.A. permits for earnings to keep away from taxation in the present day,” the report stated.

And for individuals who can afford to take action, saving and investing H.S.A. contributions long run, and paying for present well being prices out of pocket, can bolster wealth considerably later in life, Vanguard discovered.

Individuals 55 or older can contribute an additional $1,000 to an H.S.A. above the Inside Income Service’s annual limits of $3,850 for a single particular person and $7,750 for households in 2023, stated Sara Taylor, senior director of worker spending accounts at WTW, a advantages marketing consultant.

“The fact is that most individuals want extra medical care, and it may be costly,” she stated.

As soon as enrolled in Medicare, the federal well being plan for older Individuals, you can not proceed contributing to an H.S.A. — however you possibly can spend the cash you’ve collected tax-free on medical wants, together with Medicare premiums and out-of-pocket prices, Ms. Taylor stated. (Premiums for supplemental Medigap insurance policies, nevertheless, are usually not H.S.A. eligible.) When you flip 65, you can even withdraw H.S.A. funds for bills unrelated to well being care. You’ll pay atypical earnings tax however won’t owe a penalty.

Listed here are some questions and solutions about well being financial savings accounts:

What can I purchase with my H.S.A.?

You possibly can spend your financial savings on a wide range of medical and well being bills, together with physician visits, hospital stays, and imaginative and prescient and dental care. Through the pandemic, the federal government expanded the checklist of eligible bills to incorporate tampons and pads in addition to nonprescription medication like ache reduction and allergy medication. For a whole checklist of eligible well being bills, see I.R.S. Publication 502.