Make a cent: Manage HSA after “Big Beautiful Building” passes

Thanks for joining us. One notable part of the recent legislation, dubbed the “Big Beautiful Building,” is its aim to increase access to health savings accounts (HSAs). Starting in 2026, millions of Americans will qualify for these accounts. Here to explain the changes is financial advisor Katherine McCall.

So, for those unfamiliar, what exactly is an HSA? Well, an HSA is essentially a savings account focused on medical expenses, allowing you to set aside pre-tax dollars. I think of it like a safety net for unexpected healthcare costs. But, there are some downsides to consider as well.

This year, you can contribute up to $8,550 for families and $4,300 for individuals, with an additional $1,000 catch-up contribution if you’re over 55. That’s a significant amount! If you keep adding to it annually and invest wisely—like treating it as an IRA—you could really watch that money grow. But, if you do treat it like an IRA and leave it untouched, there’s a catch: when you pass away, it gets taxed as income, which can be a bit of a burden for your heirs if they’re not prepared.

Now, let’s talk about the recent changes from the new legislation. One key benefit is that a wider range of healthcare plans will now qualify for contributions. Previously, only high-deductible plans were eligible, but now even bronze plans and ACA comprehensive health plans make the cut. Also, there’s been an expansion of what qualifies as eligible expenses. For instance, you can now use HSA funds for long-term care insurance premiums, which is particularly helpful for retirees who might face those costs.

Speaking from personal experience, I recently realized I didn’t have the right supplies when I needed them. But, yes, HSAs allow you to buy everyday items like band-aids as well. And if you’re a senior looking to make home modifications—like installing grab bars in your bathroom—those costs can be considered medical expenses too.

Another point to keep in mind: if you haven’t opened an HSA but face significant medical expenses, there’s a unique option. You can transfer funds from your IRA to your HSA pre-tax. This is a one-time opportunity, but if you’re hit with a steep medical bill unexpectedly, it’s a lifeline worth knowing about.

So, I guess that covers the essentials. Thanks for sharing all this, Katherine!

Health savings accounts have been around a while, yet many employees still lack coverage through their jobs. Currently, around 35.5 million HSAs cover roughly 72 million people in the U.S., according to a recent survey. With the new law, millions who are ineligible now may find access by 2026.

McCall explains that the essence of these accounts lies in saving for future medical expenses on a pre-tax basis. She anticipates that the legislation will broaden the scope of reimbursable medical, dental, and vision expenses. This year, the maximum contributions are $4,300 for individuals and $8,550 for families, with a catch-up option for those over 55.