HSA Growth Calculator

The Only Account With Three Tax Advantages

A Health Savings Account (HSA) is the only account in the U.S. tax code that offers three separate tax benefits simultaneously. Contributions are tax-deductible (or pre-tax through payroll), investment growth is tax-free, and withdrawals for qualified medical expenses are tax-free. No other commonly available account matches this. A 401(k) or Roth IRA gives you either a deduction now or tax-free growth later, but not both with tax-free withdrawals for a specific purpose.

The catch is that you must be enrolled in a qualifying High-Deductible Health Plan (HDHP) to contribute. For 2026, the IRS (via Revenue Procedure 2025-19) defines an HDHP as a plan with a minimum annual deductible of $1,700 for self-only coverage or $3,400 for family coverage, and maximum out-of-pocket expenses of $8,500 for self-only or $17,000 for family.

The calculator above projects how your HSA balance grows over time based on your contributions, investment returns, and time horizon. Use it to see the difference between treating your HSA as a spending account (contributing and spending each year) versus treating it as an investment account (contributing, investing, and letting it compound). For a full overview, see the HSA glossary term.

2026 Contribution Limits and Eligibility

The IRS sets annual contribution limits for HSAs. Here are the 2026 limits alongside 2025 for comparison:

These limits include employer contributions. If your employer contributes $1,000 to your HSA, your personal contribution limit drops by $1,000. The $1,000 catch-up contribution is available starting the year you turn 55, even if your spouse is the HDHP holder on a family plan (each spouse needs their own HSA for the catch-up).

To be eligible to contribute, you must meet all of these conditions: enrolled in an HDHP, not enrolled in Medicare, not claimed as a dependent on someone else's tax return, and not covered by any other non-HDHP health plan (with limited exceptions for dental, vision, and accident coverage).

How the Math Actually Works

The HSA growth calculator uses the standard compound interest formula: your contributions grow based on the annual investment return rate you select, compounded over the number of years you specify. The key variable that most people underestimate is time.

If you contribute the 2026 family maximum of $8,750 per year and earn 7% annually, here is what happens at different time horizons:

The growth column assumes all funds remain invested and withdrawals are tax-free for qualified medical expenses. In a taxable brokerage account at a 24% tax rate, the same $8,750/year for 30 years at 7% would grow to approximately $670,000 after taxes, roughly $213,000 less than the HSA.

The Power Strategy: Invest, Do Not Spend

The most sophisticated HSA strategy is counterintuitive: contribute the maximum, invest in low-cost index funds, and pay current medical expenses from other funds. Let the HSA compound tax-free for decades.

Here is why this works. HSA withdrawals for qualified medical expenses are tax-free at any age, and there is no expiration date on reimbursement. If you pay a $2,000 medical bill out of pocket today and save the receipt, you can reimburse yourself from the HSA in 5, 10, or 30 years, completely tax-free. The receipt never expires.

This means your HSA functions as both a medical emergency fund and a retirement account. At age 65, HSA funds can be withdrawn for any purpose, not just medical. Non-medical withdrawals after 65 are taxed as ordinary income (like a traditional IRA), but medical withdrawals remain tax-free. This makes the HSA effectively a bonus retirement account with better tax treatment than any other vehicle.

The strategy in practice:

HSA vs. Other Retirement Accounts

The HSA outperforms every other retirement account when used for medical expenses, because it is the only account that avoids tax at all three stages.

The HSA beats the Roth IRA because contributions are tax-deductible (Roth contributions are not). The HSA beats the 401(k) because withdrawals for medical expenses are tax-free (401(k) withdrawals are always taxed). The HSA beats the taxable account on every dimension.

The optimal funding order recommended by most financial planners: (1) 401(k) to employer match, (2) max HSA, (3) max Roth or Traditional IRA, (4) remaining 401(k) contributions, (5) taxable brokerage. The HSA ranks second because the triple tax advantage is unmatched.

Choosing an HSA Provider That Allows Investing

Not all HSA providers offer investment options. Many employer-default HSAs function only as spending accounts with no investment feature. If your employer's HSA does not allow investing, you can open a separate HSA at a provider that does and transfer funds periodically.

Fidelity's HSA is the top choice for the invest-and-hold strategy because it offers the same low-cost index funds as their brokerage, with no account fees and no minimum investment threshold. If your employer uses a different HSA provider, you can still open a Fidelity HSA and do a trustee-to-trustee transfer once or twice per year.

What Qualifies as a Medical Expense?

The IRS list of qualified medical expenses (Publication 502) is broader than most people expect. Beyond standard doctor visits and prescriptions, qualified expenses include dental care including orthodontia, vision care including glasses and LASIK, mental health therapy and counseling, physical therapy and chiropractic care, long-term care insurance premiums (limited), Medicare Part B, Part D, and Medicare Advantage premiums (after 65), COBRA premiums while receiving unemployment compensation, hearing aids, acupuncture, and medically necessary home improvements.

Expenses that do not qualify: gym memberships (without a specific medical diagnosis), cosmetic procedures, vitamins and supplements (without a physician's prescription for a specific condition), and insurance premiums (except the exceptions noted above).

Real-World Examples

Example: Sana and Raj, 34, family HDHP coverage, maximizing HSA for 30 years

Situation: They contribute the 2026 family maximum of $8,750/year. Their employer contributes $500/year, so their personal contribution is $8,250. They invest in a low-cost S&P 500 index fund averaging 7% annual return. They pay all medical costs from their checking account and save receipts.

What they calculated: After 30 years, total contributions of $262,500 grow to approximately $883,000. Of that, $620,500 is tax-free growth. In retirement, they can reimburse themselves for decades of saved medical receipts tax-free, and after age 65, withdraw any remaining balance for non-medical expenses (paying only ordinary income tax, like a traditional IRA).

Compared to taxable: The same contributions in a taxable account at 24% tax rate would grow to approximately $670,000 after taxes. The HSA advantage is roughly $213,000.

Example: Trevor, 28, self-only HDHP, treating HSA as spending account vs. investment account

Situation: Trevor contributes $4,400/year (the 2026 self-only max). He has two options: spend the HSA on current medical expenses each year, or invest it and pay medical costs from other funds.

Option A (spending): He contributes $4,400, pays roughly $1,200 in medical expenses from the HSA, and the remaining $3,200 stays in cash earning minimal interest. After 20 years, his balance reflects only what he did not spend, with no investment growth.

Option B (investing): He contributes $4,400, invests the full amount at 7%, and pays medical expenses from his emergency fund. After 20 years, his HSA balance is approximately $189,000, with $101,000 in tax-free growth. He has saved $24,000 in medical receipts over those 20 years that he can reimburse tax-free at any time.

The difference: Option B gives Trevor an additional $101,000 in tax-free wealth that Option A never generates. The only cost is paying medical expenses from other funds, which requires having an emergency fund in place.

Common Pitfalls to Avoid

Treating the HSA as a spending account. If you contribute and immediately spend the full balance each year, you get the tax deduction on contributions but miss the tax-free growth entirely. The triple tax advantage only materializes when you invest and let the money compound.

Not investing the balance. Many HSA accounts default to a cash position earning minimal interest. You have to actively select investments within the HSA, typically after maintaining a $1,000 to $2,000 cash threshold. Leaving $30,000 in cash for 10 years at 0.5% interest instead of investing it at 7% costs roughly $25,000 in foregone growth.

Assuming you will lose the money if you do not spend it. Unlike a Flexible Spending Account (FSA), which has a use-it-or-lose-it rule, HSA funds roll over indefinitely. The balance is yours forever, even if you change employers or switch to a non-HDHP health plan. You just cannot make new contributions without HDHP coverage.

Forgetting to save receipts. If you plan to reimburse yourself in retirement for past medical expenses, you need documentation. Save every medical receipt with the date, provider, and amount. Digital copies are sufficient. The IRS does not impose a time limit on reimbursement claims, but you need proof if audited.

Using HSA funds for non-medical expenses before age 65. Withdrawals for non-qualified expenses before age 65 are subject to both ordinary income tax and a 20% penalty. After age 65, the penalty disappears and non-medical withdrawals are taxed as ordinary income (same as a traditional IRA). For help prioritizing where your savings should go, see our guide on 401k contributions at your first job.

This calculator is for educational and informational purposes only and does not constitute financial or tax advice. HSA contribution limits, eligibility requirements, and qualified expense definitions are set by the IRS and subject to change. Investment returns are not guaranteed. Consult a tax professional or financial advisor for guidance specific to your situation.