Retirement Planning, Elder Law, and Senior Finance

2/22/2023 | By Sandra Block

A health savings account provides one of the most-effective strategies to save for health care in retirement.

Contributions are pretax (or tax-deductible, if your HSA isn’t employer-sponsored), the funds grow tax-deferred, and withdrawals are tax-free for qualified medical expenses. There are no income limits on HSAs, but you must be enrolled in a qualified high-deductible health insurance plan to contribute. In 2023, the health plan must have a deductible of at least $1,500 for self-only coverage or $3,000 for family coverage.

Maximum contributions are adjusted annually for inflation. In 2023, you can contribute up to $3,850 for self-only coverage or $7,750 for family coverage. If you’re 55 or older, you can contribute an additional $1,000.

You can use funds in your HSA to pay medical expenses that aren’t covered by your insurance, and that’s the way many families use their HSAs. But if you can afford to pay those expenses out of pocket and allow your HSA to grow, the tax benefits make it a powerful savings tool.

save for health care in retirement - money in jars

Unlike flexible savings accounts, which must be depleted by year-end (or in some cases, March 31 of the following year), you can carry over unused money in your HSA from year to year. In addition, health savings accounts are portable: If you change jobs, you can take your account with you when you go.

You can continue to contribute to your HSA until you enroll in Medicare. After that, you’re no longer permitted to contribute to an HSA, but you can use the funds to pay for medical expenses that Medicare doesn’t cover, as well as monthly premiums for Medicare Part B and Part D and Medicare Advantage plans. You can also use the funds to pay a portion of long-term-care insurance premiums, based on your age. In 2023, for example, a 60-year-old can withdraw up to $1,790 to pay long-term-care insurance premiums.

Another significant advantage to HSAs that’s often overlooked is that you can invest your contributions, providing the potential for years of tax-free growth. Not all health savings accounts come with an investing option, but if your employer-provided HSA lacks this feature, you can open a second HSA at a provider that does. Once you’ve done that, you can add money to that account in tandem with your workplace contributions up to the maximum limits — or you can contribute to your workplace HSA and periodically shift funds to your investing HSA.

You can compare fees and investment options at If you don’t plan to tap the account until you retire and retirement is still years away, consider investing a large portion of your account in stocks and stock mutual funds to get the most benefit from tax-free growth.

Follow these guidelines to save for health care in retirement and keep regret at bay.

Sandra Block is a senior editor at Kiplinger’s Personal Finance magazine. For more on this and similar money topics, visit

©2023 The Kiplinger Washington Editors, Inc. Distributed by Tribune Content Agency, LLC.

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Sandra Block

Sandra Block is a senior editor at Kiplinger’s Personal Finance magazine. For more on this and similar money topics, visit