From Yahoo Finance: 2025-05-22 17:20:00

The House passed a tax package expanding health savings accounts (HSAs) with the biggest contribution increase for 2026, aimed at eliminating barriers for lower-income individuals. HSAs offer a triple tax advantage and require enrollment in high-deductible health plans. Annual contribution limits will double under the new legislation.

Other provisions include allowing both spouses to make catch-up contributions, more flexibility with flexible spending accounts (FSAs), and the inclusion of gym memberships and concierge medical care as qualifying expenses. Individuals 65 or older and enrolled in Medicare Part A can continue contributing to an HSA, and rollovers from health FSAs into HSAs are permitted.

Increased contribution limits could encourage using HSAs as a retirement savings vehicle. Only about 11% of HSA accountholders contribute the maximum amount due to competing financial priorities. Most HSA funds are used for current medical expenses, but the new legislation may shift this trend towards using HSAs for retirement savings.

On average, a 65-year-old retiree may need $165,000 in after-tax savings to cover health care expenses throughout retirement. The provisions in the legislation aim to provide more options and flexibility for individuals using HSAs for health care and retirement planning.

Read more: Health savings accounts are poised to get a big boost in Trump’s tax package