On July 4, 2025, the One Big Beautiful Bill Act (OBBBA)‡ was enacted, and there are certain aspects of the bill that provide newly eligible groups immediate access to the benefit HSAs can provide. Now is a great time to become familiar with new changes, refresh your memory on key aspects of health savings accounts (HSAs), and learn how you can maximize the benefits of an HSA to meet your individual needs.
Reviewing your healthcare spending and saving strategy should be a key step in your overall financial plan to help you gain financial confidence. With healthcare spending on the rise‡, utilizing a health savings account (HSA) to offset current or future healthcare expenses is more important than ever.
What’s new
Starting in 2026, enrollment in a Bronze or Catastrophic plan through the ACA Marketplace makes an individual eligible to contribute to an HSA. That’s true even for Bronze or Catastrophic plans that don’t meet the IRS definition of a high-deductible health plan¹ (HDHP). More than seven million people‡ fall into this category, making it the largest ever expansion of access to HSAs to date.
Learn about your HSA
Empower your financial decisions by learning exactly what happens when you invest in your HSA. With an HSA, the money an accountholder contributes to the account can grow over time to be used for future medical expenses. HSAs enjoy a triple tax² advantage:
- Money goes into the account tax-free³
- Money earns tax-free interest
- Investment⁴ earnings and money can be withdrawn tax-free when used for eligible expenses
In addition, an HSA allows you to pay medical costs throughout the year, whether they are planned or unplanned.
Know the contribution details
When reviewing your HSA, start by checking your account to see if you reached your maximum contribution for the year. In 2026, HSA maximum contributions increased to $4,400 for individuals and $8,750 for those with family coverage. For 2026, if you are 55 or older, you can contribute an extra $1,000 at the end of the year.
Another key detail of HSA contributions that many don’t realize is that you have until April 15 of the following year to contribute toward the previous year’s HSA maximum. For example, if, at the end of 2026, you’ve contributed $4,000 to your individual HSA, you can designate up to $400 between Jan. 1 and April 15, 2027, to go toward the 2026 contribution limit so you hit the maximum amount allowed.
Use an HSA for retirement
Bolster your savings with an HSA by avoiding withdrawals from the account until retirement. When money is left in an HSA, balances can grow due to interest rates and investment options, making it a valuable complement to a 401(k), IRA and other retirement savings. In this way, an HSA can be a key component of your retirement savings and planning and can help alleviate worries about future medical expenses.
Manage health expenses during challenging times
While your HSA dollars can be saved and invested, you can also weather financial difficulties by purchasing health-related items using your HSA dollars, including over-the-counter medications such as non-prescription pain relievers and cold/flu medications. Generally, your HSA dollars can’t be used to pay monthly health insurance premiums; however, if you are collecting unemployment insurance or are paying for healthcare yourself with COBRA insurance while you are unemployed, you can use your HSA to do so.2
Maximize your HSA to its fullest potential
Some people use their HSAs to pay current healthcare bills, while others prefer to save funds for future needs. Because funds in an HSA are owned by the accountholder, the HSA balance can build over time. To get a better idea of how to make the most of these accounts, you can learn from how other individuals manage their HSAs.
- Spenders: These accountholders spend their HSA dollars on health expenses as they are incurred.
- Savers: These individuals don’t use their funds for current expenses. Instead, they pay for the medical expenses out-of-pocket, with the goal of saving their HSA funds for later. This allows the HSA balance to grow the HSA account balance over time. As you age, your health needs—and expenses—increase, which makes saving and investing in an HSA a strategic move.
Understand your expenses
At the end of each year, review your health-related expenses to better estimate your typical annual costs and what you might use your HSA to cover. Remember that some everyday items such as over-the-counter pain relievers or contact lenses can be paid for using HSA funds.
In addition, think of any upcoming health needs you may have, including surgeries, pregnancies, or ongoing prescriptions. Those out-of-pocket expenses should be the minimum you save in your HSA, but consider contributing more than that each year (up to the maximum).
If you are contributing to your HSA through payroll deduction, check with your employer to find out how you can increase the amount being directed into your HSA. This way, the contributions will happen without you needing to remember to move the funds.
Healthcare costs are a part of everyone’s life and managing them can be challenging. An HSA is a way to help gain more control of how these costs are covered while also setting you up for less stress over future medical bills.
Learn more about UMB Healthcare Services.
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¹High-deductible health plans constitute insurance products, which are not offered by UMB Bank, n.a. and are not FDIC-insured.
²All mention of taxes is made in reference to federal tax law. Neither UMB Bank n.a., nor its parent, subsidiaries, or affiliates are engaged in rendering tax or legal advice and this document is not intended as tax or legal advice. You should consult your own tax professional to assess your personal situation.
³States can choose to follow the federal tax-treatment guidelines for HSAs or establish their own, some states tax HSA contributions. Please check with each state’s tax laws to determine the tax treatment of HSA contributions or consult your tax adviser.
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