Of all the accounts available to pre-retirees, the Health Savings Account is the one I find most consistently underused, not because clients do not know it exists, but because most people think of it as a way to pay this year’s doctor bill rather than as a retirement funding tool. If you are still working and have access to a high-deductible health plan through an employer like JPL, Boeing, Northrop Grumman, or Raytheon, understanding what an HSA can do before you retire is worth ten minutes of your attention.

What Makes an HSA Different From Every Other Account

Most accounts give you one tax advantage. A traditional IRA gives you a deduction when you contribute. A Roth IRA gives you tax-free growth and withdrawals, but no tax deduction when you contribute. An HSA, when used correctly, gives you all three:

1. Contributions are tax-deductible (or pre-tax if made through payroll)
2. Growth inside the account is tax-free
3. Withdrawals for qualified medical expenses are tax-free, at any age

No other account available to most workers offers all three at once, which is why I refer to it as the triple tax play.

Contribution Limits and the Catch-Up Opportunity

For 2026, the HSA contribution limit is $4,400 for self-only coverage and $8,750 for family coverage, with an additional $1,000 catch-up contribution available for those age 55 and older. If you are covered by a high-deductible health plan and eligible to contribute, maximizing that contribution each year, rather than contributing only enough to cover this year’s deductible, is one of the more overlooked moves available to someone five to ten years from retirement.

I worked with a couple, both still employed, who had been using their HSA strictly as a pay-as-you-go account, spending down the balance each year on routine medical costs. Once we modeled what maximizing contributions and paying current medical expenses out of pocket instead could do over the following eight years, the difference in projected retirement healthcare funding was substantial enough that they changed their approach the same year.

The Strategy: Pay Out of Pocket Now, Let the HSA Grow

The real power of the triple tax advantage shows up when you resist the urge to use the HSA for every small medical expense as it happens. If your cash flow allows it, paying current medical costs from a checking account and letting the HSA balance invest and grow turns the account into something closer to a specialized retirement account than a spending account.

Here is the detail that surprises most clients: there is no deadline on reimbursing yourself. If you pay a medical expense out of pocket today and keep the receipt, you can reimburse yourself from the HSA years, even decades, later, tax-free, whenever you choose. That means the receipts you are saving now can become a source of tax-free cash flow in retirement, on your own schedule.

What Happens to Your HSA Once You Enroll in Medicare

This is the piece that catches people off guard. Once you enroll in Medicare, you are no longer eligible to contribute to an HSA, even though you can continue to use the funds in the account for qualified expenses, including Medicare premiums (excluding Medigap), copays, and other medical costs.

This creates a practical planning window: the years between becoming HSA-eligible and enrolling in Medicare are the only years you can contribute. Front-loading contributions during that window, rather than assuming there will always be time later, is part of why this deserves attention well before you retire, not after.

After Age 65: The HSA Becomes Even More Flexible

Once you turn 65, the rules loosen further. Withdrawals for non-medical expenses are no longer subject to the 20% penalty that applies before 65; you simply pay ordinary income tax on them, similar to a traditional IRA withdrawal. That means an HSA effectively becomes a backup traditional IRA after 65, with the added benefit that any withdrawal used for a qualified medical expense remains completely tax-free at any point.

What This Means for You

1. Contribute the maximum you can each year, including the catch-up amount if you qualify
2. Pay current medical expenses out of pocket when your cash flow allows it, and let the HSA balance invest and grow
3. Keep digital or physical records of medical expenses you could reimburse yourself for later
4. Map out how many years remain until you expect to enroll in Medicare, since that marks the end of your contribution window
5. Revisit your HSA investment allocation, since many people leave the balance sitting in cash rather than investing it for growth

A Small Account With an Outsized Impact

The HSA is a modest line item on most people’s list of accounts, but for those who use it deliberately in the years before retirement, it can become one of the most tax-efficient sources of healthcare funding. It rewards patience and a bit of planning years in advance, which is exactly why fall, while you still have time to adjust this year’s contributions, is a good time to look at it.

If you would like to talk through how an HSA fits into your broader retirement plan, I would welcome the conversation. Schedule a discovery call, and we can look at your specific situation.