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Your Health Savings Account

Health savings accounts or HSAs can be used to pay for qualified medical expenses, such as deductibles and copays, and to invest in your future.

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Getting to know your HSA

An HSA is a health savings account you get with a high-deductible plan. By saving money in an HSA, you can put away money for current medical expenses or prepare for your or your family’s future health care costs. You may also use it as a buffer to protect your retirement budget from out-of-pocket medical expenses.

According to 2025 estimates, a 65-year-old retiring in 2025 can expect to spend an average of $172,500 on health care and medical expenses throughout retirement.*

Your HSA has many advantages

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An HSA offers a triple tax advantage. Your payroll deduction contributions, interest earned on investments and withdrawals for qualified expenses are all tax free.

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Once your HSA balance reaches a certain amount, you can choose to invest in a selection of investments to boost your savings. Any gains are earned tax-free.

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You own your HSA. So, whether you select a new health plan, change jobs or retire, the money goes with you.

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Anyone can deposit money in your HSA, including you, your employer, your spouse and dependents, up to an annual limit set by the IRS.

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Check your HSA balance, activity, deposits and withdrawals

Contributing

Contributing to your HSA is easy. There are a few ways you can add money to your account. These include:

  • Having a set amount taken out of each paycheck before taxes
  • Having your employer deposit money into your HSA
  • Moving money from an individual retirement account or IRA to your HSA using a one-time rollover

You can also deposit money that’s already been taxed. These contributions can be deducted from your taxable income when filing your annual return. Anyone can deposit money into your HSA, including you, your employer, your spouse and dependents up to an annual limit set by the IRS. If you're 55 or older, you can deposit an additional amount — over the maximum limit per year — to maximize your savings.

Using the money in your HSA

When you go to the doctor’s office, the doctor will bill Blue Cross for your services. Once the bill has been processed, you’ll get an explanation of benefits or EOB. Any out-of-pocket charges you may owe will be on your EOB. You’ll receive a bill from your doctor for the out-of-pocket amount, which can be paid with HSA funds.

  • Medical: Copays and prescriptions
  • Benefits: Mental health, dental and vision care
  • Hospital expenses: Stays, surgeries and lab work
  • Medical equipment: Wheelchairs, walkers and more
  • Contraception, breast pumps and more

You can use your HSA debit card to pay for these expenses. Or, if your HSA balance is low, you can pay out of pocket and reimburse yourself from your HSA account when the balance increases. See the Internal Revenue Service or IRS Publication 502 for a complete list of qualified expenses.

Savings and investments

Your HSA is a great way to save for retirement expenses. HSA contributions and the interest earned roll over each year and are never lost. If your employer puts money in your HSA, this money and any interest earned is still yours and can go with you if you change jobs.

Besides earning interest on your HSA balance, once it’s reached a preset amount, you can move a portion of your balance into a select group of solid investments. Like the money in your account, any gains earned on your investments are tax free.

These gains can compound, potentially earning long-term growth with significant tax savings compared to other retirement account options. Plus, if you need money for unexpected medical costs, there are no financial penalties for moving invested dollars back into your HSA to pay for qualified medical expenses.

Managing your plan

It’s easy to manage your health plan and HSA in one place with your Blue Cross Blue Shield of Michigan member account. Log in or register through our mobile app or at bcbsm.com to:

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Get a snapshot of out-of-pocket costs

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Check your activity

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View your eligible expenses

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See what’s covered

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Check the status of claims

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Research your costs

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Find a doctor and more

Log in Download the BCBSM mobile app to access your HSA

More about health savings accounts

Learn more about your HSA and how it works.

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Getting to know your HSA plan

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You have an HSA, now what?

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Six tips for maximizing your HSA

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HSA resources

Make the most of your HSA with these helpful resources.

Ways to make an HSA work for you
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A smart way to save for health care expenses
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Qualified medical expenses
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Frequently asked Questions

An HSA-compatible health plan is a health plan that meets IRS deductible, out-of-pocket maximum, and coverage requirements. Most of the time, an HSA-compatible health plan will have a high deductible with lower monthly premiums.

An HSA-compatible health plan provides your health care coverage. An HSA works in conjunction with your health plan to provide additional financial stability by covering out-of-pocket health care costs, such as deductible and coinsurance, from a tax-advantaged savings account.

Yes. The money in your HSA can be used to pay for qualified medical expenses for any family member who qualifies as a dependent on your tax return. However, if the dependent isn't covered under your health plan, your children's expenses won’t be applied toward your deductible or out-of-pocket maximum.

No. However, penalties may apply for nonqualified withdrawals before age 65.

  • If you’re younger than 65, you’ll be taxed and receive a 20 percent penalty.
  • If you’re 65 or older, you’ll be taxed on the money you use, but won’t have to pay a penalty.

If you pay for qualified medical expenses out of pocket, you can reimburse yourself with funds from your HSA.

Yes. If you aren’t enrolled in Medicare and remain enrolled in an HSA-compatible health plan, you can contribute to an HSA.

Yes. You’ll need to complete a transfer or rollover form, and any applicable paperwork with your previous administrator.

Yes. An HSA is portable but how you use it depends on your coverage.

  • If you have an HSA when you become unemployed, the account is portable. You own the account and the money in it.
  • If you’re unemployed and have an HSA-compatible health plan, you can open, contribute and use HSA funds for qualified medical expenses.
  • If you’re unemployed and don’t have an HSA-compatible health plan, you’re not eligible to open a new HSA or contribute to an existing HSA. However, you’ll still be able to access your funds from an existing HSA.

Yes. An annual HSA catch-up contribution of $1,000 is allowed for those ages 55 or older.

Once your HSA reaches a certain balance, you can invest in a selection of mutual funds to boost your savings.

Yes. You can make a one-time rollover from your IRA into your HSA, up to the maximum contribution limit for that year. Other rules may apply.

That depends:

Under 65

  • If you’re under age 65, retired and still have an HSA-compatible health plan, you can continue to contribute to the HSA and use the funds for qualified medical expenses.
  • If you’re under age 65, retired and don’t have an HSA-compatible health plan, you’re no longer eligible to contribute to the HSA, but can continue to use the funds for qualified medical expenses.

65 and older

  • If you’re 65 or older, retired and on Medicare, you’re no longer eligible to contribute to the HSA, but can continue to use the funds for qualified medical expenses.
  • If you’re 65 or older, you’re not limited to using an HSA just for health care expenses. You may use it for other expenses; however, you’ll need to pay income taxes on those amounts but won’t have any early withdrawal penalties.

While distributions from most common retirement accounts count as taxable income, you may use HSA funds for qualified medical expenses tax free. Since out-of-pocket medical expenses can be a major drain on retirement savings, it’s a good idea to use your HSA for health care costs and save your IRA or 401(k) for other costs. The total projected lifetime health care costs for a healthy 65-year-old retiring this year are expected to be $165,000 in today’s dollars.*

Furthermore, since qualified medical expenses are tax free from your HSA, you could save up to $70,000, assuming a 25% tax rate, as compared to paying for medical costs out of an IRA or 401(k).

It’s important to designate a beneficiary, or person who gets your HSA without tax consequences, upon your death. Designate or change your beneficiary through your Blue Cross member account or by completing a Beneficiary Designation Form.

  • If your beneficiary is your spouse, he or she becomes the owner of the HSA upon your death and may use the funds for qualified medical expenses and carry the account into retirement.
  • If the beneficiary isn’t your spouse, your HSA is closed on the date of your death. Your beneficiary will receive the fair market value of the assets in your account, which will be treated as taxable income. 
  •  If you choose not to designate a beneficiary, the assets in your account will be included on your final income tax return as part of your estate.

You, your spouse and any dependents that you claim on your tax return can use your HSA to pay for eligible medical expenses.

  • If your beneficiary is your spouse, he or she becomes the owner of the HSA upon your death and may use the funds for qualified medical expenses and carry the account into retirement.
  • If the beneficiary isn’t your spouse, your HSA is closed on the date of your death. Your beneficiary will receive the fair market value of the assets in your account, which will be treated as taxable income. 
  •  If you choose not to designate a beneficiary, the assets in your account will be included on your final income tax return as part of your estate.

* How Much Money Do You Need to Retire? Consider 5 Guidelines | Citizens

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