Health Savings Accounts (HSA) are popular ways to save tax-advantaged funds for medical expenses. HSAs can also help you save for retirement by deferring the account's use for several years while covering short-term medical expenses with other income. Follow these steps to set up an HSA account:

Create HSA Accounts

  1. Go to My Plan > Savings & Assets.

  2. Scroll to "Do you have tax-advantaged retirement savings?"

  3. Click on "Add another account."

  4. Enter a detailed account name such as "My HSA."

  5. Enter your current account balance (enter "$0" if you plan to make future contributions)

  6. Select "HSA" for the account type

  7. If your "HSA" is invested, enter optimistic and pessimistic growth rates. If your "HSA" is liquid, enter "0%" for growth rates.

  8. Repeat this process if your spouse has an account

Set up annual contributions

  1. Go to My Plan > Savings & Assets.

  2. Scroll to "Do you or will you save more to your accounts?"

  3. Click on "Add another savings contribution."

  4. Select an HSA account to save towards

  5. Select your monthly contribution

  6. Select your contribution timeline

  7. Select a reason

  8. Repeat this process if your spouse has an account

HSA Assumptions

HSAs have contribution limits for individuals and families (contribution limits are not modeled in the tool).

HSAs must be used for medical expenses, excluding premiums (spending restrictions are not modeled in the tool).

While HSAs are excluded from Federal Tax obligations, some states tax HSA contributions (state-specific taxes on contributions are modeled in the tool while state-specific taxes on growth within these accounts are not).

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