When you retire, one of the biggest expenses you may be confronted with on a regular basis is health care. Even if you enroll in Medicare, you may need to pay various medical costs out-of-pocket — and, in general, costs are going up, not down. Fortunately, there are tools that can help make these expenses more manageable, one of which is a Health Savings Account, or HSA. If an HSA is available to you, you may want to explore its potential benefits.

A targeted, tax-advantaged savings tool

HSAs are savings plans associated with high-deductible health insurance policies. Many employers offer policies with HSAs, but if you’re retired, an account may be available to you if you purchased individual coverage in the past. Keep in mind that you can participate in an HSA prior to age 65 (the age at which you qualify to enroll in Medicare).

HSAs are funded with pre-tax dollars. For those still working, pre-tax dollars can be funded through payroll deductions, which are made before income tax withholding is calculated on each paycheck. Otherwise, it can be done through tax-deductible contributions. In 2026, you can make a contribution of up to $4,400 in an HSA for self-only coverage, which is a $100 increase from the 2025 contribution limit. A family can contribute up to $8,750 per year, which is a $200 increase from the 2025 contribution limit1.

The power of HSAs is that you may use the funds to cover qualifying medical expenses today or in the future. When you make a payment from an HSA, funds are withdrawn with no federal taxes due and, in most cases, no state taxes as well (check with your tax advisor to find out what rules apply in your case).

A flexible account for retirees

Money in the account can be invested and grow on a tax-deferred basis. Any dollars remaining in your HSA can continue to accumulate in your account and help offset medical expenses in retirement. At that time, you can withdraw dollars from your HSA on a tax-free basis to meet expenses such as:

Medicare premiums

Health insurance deductibles

Dental, vision and hearing care

A portion of premiums for tax-qualified long-term care insurance

Other out-of-pocket medical expenses.

Good planning makes a difference

While saving in an HSA, you may want to try to retain as many assets as you can in the HSA to take full advantage of it as a retirement savings vehicle. Talk with your financial adviser to learn more about how an HSA can be incorporated into your comprehensive retirement plan.

CNBC, “IRS unveils new HSA limits for 2026. Here’s what investors need to know.” “https://www.cnbc.com/2025/05/02/hsa-limits-2026.html” \hhttps://www.cnbc.com/2025/05/02/hsa-limits-2026.html

Trisha Schaar, CRPC, CLTC, APMA, is a financial adviser with Echelon Wealth Partners, a private wealth advisory practice of Ameriprise Financial Services, LLC in Marshall, MN. She specializes in fee-based financial planning and asset management strategies and has been in practice for 8 years. To contact her, ameripriseadvisors.com/trisha.m.schaar, (507) 532-2210, 100 West College Drive, Suite 103, Marshall, MN