Health Savings Accounts: How an HSA Works

And How to Make it Work for You

Health Savings Accounts: How an HSA Works2021-07-01T12:27:28-04:00
How an HSA Works Video Thumbnail

What is an HSA and how does it work?

A health savings account (HSA) is like a 401(k) for health care. HSAs are tax-advantaged accounts that accumulate interest and can earn investment returns. The funds can be used to pay for qualified medical expenses today or can be saved for future expenses.

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HSA funds you don’t use stay put and roll over year after year.

Your health savings account is yours forever — even if you change jobs or health insurance plans.

HSA Eligibility Questions Answered

You must be covered by a qualified High Deductible Health Plan (HDHP) to be able to take advantage of HSAs. An HDHP generally costs less than what traditional health care coverage costs, so the money that you save on insurance can then be put into the Health Savings Account.

You own and control the money in your HSA. Decisions on how to spend the money are made by you without relying on a third party or a health insurer. You also decide what types of investments to make with the money in the account.

The rules for funding and accessing funds in an HSA are legislated by the IRS and are tax-free only if used for health care expenditures, but there are literally thousands of products and services that meet the approved health care expenditures requirements in Section 213(d) Medical Expenses as defined in the IRS code.

Qualified medical expenses under an HSA are defined as: medical copayments or coinsurance, long-term care costs, dental care costs, vision care costs, prescriptions medications and some over-the-counter medications. HSA funds can also be used to pay for some post-tax insurance premiums, COBRA and long-term care premiums.

For a list of approved health care expenditures, please refer to our Eligible Expenses page.

Yes. Funds can be used to cover qualified medical expenses for the account holder as well as the account holder’s spouse and dependents.

Get the answers to more Frequently Asked Questions.


Triple Tax Advantage of HSAs

  • Contributions made to an HSA are pre-tax, reducing overall taxable income

  • Money earned with investments and through interest payments are tax free

  • Use tax-free funds from an HSA to pay for qualified health care expenses

Make the Most Your of HSA

HSA contribution limits for 2022:


HSA Interest and Investments

Interest earnings – from day one!

Enjoy interest earnings on your HSA balance from the first day your HSA is active.

Investments – for the saver in you!

Consider investing HSA funds in nationally recognized mutual fund families. It’s simple to set up and manage online.

With a Optum Financial HSA, you can choose from a variety of world-class mutual funds covering a range of fund families and set up investments within minutes via our easy-to-use online platform.

Savings That Add Up

Say you contribute $3,000 a year to your HSA each year until retirement. Assuming you use $1,500 a year for medical expenses, earn 8% a year in interest and investments, and reinvest all earnings, your savings can really add up — based on estimates produced with the HSA Growth Calculator.

Starting Age HSA Value at Age 65
25 $419,680
35 $183,523
45 $74,137
55 $23,469

Put Your HSA to Work

Calculate Potential Growth

Resources & Tools


Download the App

Manage claims on the go with the mobile app — available in iTunes and Google Play

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Manage Your HSA

Take control of all your Optum Financial benefits with the easy-to-use online portal

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Customer Service

Get Help 24/7

Based in the US, our customer care experts are ready to help resolve any issue, any time

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Estimate Growth Potential

See how much contributing to an HSA now could pay off in the long term

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Eligible Expenses

Find HSA-Eligible Items

Check out the eligible expenses list to see just how useful an HSA can be

View Items


Buy HSA-Eligible Items

We’ve launched Optum Financial Marketplace to help you make HSA-eligible purchases online

Learn More


Get Helpful Tips

Our blog, Connections, is the perfect place to find helpful HSA articles

Read the Blog

HSA Academy

Continue Learning

Learn more about HSAs and put your knowledge to the test with HSA Academy

Learn More


Get Answers

There’s a lot to know about HSAs, which is why we’ve put together these FAQs

View FAQs

The Optum Financial Difference

Not all health savings accounts are alike.

A Optum Financial HSA can come with many features that make it unique and optimized for account holders.

We also deliver a user experience that can help Optum Financial participants get the most from their HSAs.

HSA On Demand®

Your employer may elect to offer a special Optum Financial feature called HSA On Demand, which allows employees to access future contributions to your HSA – even before they are deposited into your account.

How it Works

  • If you have a health care expense early in the year and don’t have enough money in your account, you can use money from the your future contributions interest free.
  • HSA On Demand funds become available when you have a claim that exceeds your HSA balance.
  • Your future HSA contributions pay back the amount you used.

Check your company’s benefits information or talk to an HR representative to find out if HSA On Demand is enabled.

HSA Save-It!

HSA Save-It! is a convenient tool that tracks your eligible expenses as you build your Health Savings Account (HSA) balance, then makes it easy to cash out funds – tax free – when you need them.

How it Works

  • Pay for eligible health care expenses using personal funds instead of your HSA.
  • Log those expenses online in HSA Save-It! and upload your receipt.
  • When you’re ready, request funds at any time with the click of a button.

Whether you cash out your HSA savings in 2 days or 20 years, making a withdrawal is fast and easy with HSA Save-It!

HSA Save It Infographic on Tablet

Having the right people and technology makes all the difference. We invest in both.

Manage everything online or on-the-go!

Easily manage your account and submit claims anytime, anywhere thanks to the advanced technology powering our participant website and mobile app.

Superior customer service

Our 24/7, U.S.-based customer service operation has earned outstanding satisfaction rates from employers and participants alike.

Payment Card convenience

For ease-of-use and automated recordkeeping, nothing compares to the convenience of a payment card. As simple as a credit card—with the added benefit of a tax-ready audit trail.

Employee Communications

Helping people understand how to use the benefits program and leverage the speed of self-service reimbursements helps everyone in the process stay efficient and happy.

Our communications use plain language and talk to account holders as real people. We don’t believe in overloading people with technical language, acronyms, and jargon.

Check out some of the HSA blog posts below and HSA Academy to expand your account knowledge.

HSA Academy

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