Health Plan or Wealth Plan? With an HDHP/HSA Combo, It’s Both.
- Tyler Weerden
- Nov 5
- 21 min read
Updated: Nov 8
As someone who writes a lot of personal finance material, I try to avoid repeating topics...except for this one. With Federal Benefits Open Season right around the corner (November 10 – December 8) I would be flat out wrong to not write about one of my favorite accounts, the Health Savings Account (HSA).
Disclaimer
In this article, I’m simply talking numbers – the nerdy spreadsheet stuff. The decision you make regarding your family’s insurance plan should encompass a lot more than just the numbers. Life is not a spreadsheet. Even decisions that appear to be clear winners on paper, may not end up being the right decision.
Please compare plans using this free OPM tool and understand what the plans do/do not offer. If you have certain prescriptions, a planned surgery, or any special circumstance, call the plan provider and ask them about your responsibility versus their coverage.
I have used GEHA HDHP with an HSA since 2020 and have had no issues. However, I’m a 30-something-year-old with no major health issues using a self-only plan. Your mileage may vary.
Premiums on the Rise
2026 FEHB average premium increase: 12.3%
2025 FEHB average premium increase: 13.5%
2024 FEHB average premium increase: 7.7%
2023 FEHB average premium increase: 8.7%
This is one reason why HDHP plans on a net cost basis (even with a higher deductible) may save you money. I’ll run through a comparison of GEHA HDHP, BCBS Basic, and BCBS Standard below.
ATTN: Soon-To-Be Retirees
“I’m retiring, am I allowed to switch now?”
There is a rumor that just won’t go away. This one is almost as prevalent as bats being blind, camels storing water in their humps, and knuckle cracking causing arthritis. You absolutely, 100%, can undoubtedly change your FEHB coverage during your last 5 working years. For some reason, people have spread the myth that you must be covered by the same FEHB plan for 5-years before retirement. This is not true.
Don’t believe me? Let’s ask OPM.
This is directly from the OPM website:
“To continue your health benefits enrollment into retirement, you must:
(1) Have retired on an immediate annuity (that is, an annuity which begins to accrue no later than one month after the date of your final separation); and
(2) Have been continuously enrolled (or covered as a family member) in any FEHB Program plan (not necessarily the same plan) for the five years of service immediately preceding retirement, or if less than five years, for all service since your first opportunity to enroll.”
Benefits of the Health Savings Account
The HDHP is your insurance coverage while the HSA is an added feature. With HDHP plans, the bi-weekly premium deducted from your paycheck tends to be cheaper since more of the out-of-pocket (OOP) burden is on you in the form of a higher deductible (don’t let this scare you – more on this below).
On top of having insurance coverage with lower bi-weekly premiums, the HDHP with an HSA provides:
(1) Premium Pass-Through (PPT): This is where part of your bi-weekly premium is returned to you via a deposit in your HSA account. This money can be invested, saved in cash, or spent on medical expenses. For 2026, the GEHA HDHP offers $1,000 PPT for self-only plans ($83.33 per month) and $2,000 for self plus one and family plans ($166.66 per month). This is money you paid for health insurance that is given back to you.
(2) HSA contributions are pre-tax, meaning they reduce your federal taxable income and also your state taxable income (except for CA & NJ).
(3) HSA contributions made via payroll deduction are not subject to FICA/payroll tax, saving you an additional 7.65%.
(4) Your contributions can be invested in a variety of investments, just like an IRA, which is why some people call an HSA a “Medical IRA”.
(5) HSA dollars grow tax-free (just like Roth TSP, Roth IRA, Roth 401(k), etc.)
(6) HSAs are Portable! This account (and the money held in it) is yours for life, even if you leave your job, retire, or change to a health insurance plan that’s not HSA eligible.
(7) Unlimited carryforward to the next year. There is no “use or lose” like with an FSA.
(8) No income restrictions to contribute. For example, if you make $1 million, you can contribute to an HSA (if you meet the 4 eligibility points explained below).
(9) No income requirements to contribute. If you make $0, you can contribute to an HSA (if you meet the 4 eligibility points explained below).
(10) No Required Minimum Distributions (RMDs). RMDs are forced distributions from pre-tax/traditional accounts when you reach a certain age. For anyone born in 1960 or later, their RMD age is 75. This means distributions will be required from your traditional TSP, traditional IRA, traditional 401(k), etc.
(11) HSA distributions are tax and penalty-free if used for qualified medical expenses (there are a ton of things that qualify).
(12) Distributions are tax and penalty-free to reimburse yourself for medical expenses that were paid out-of-pocket (OOP) at any time after you established your HSA.
(13) Once you reach age 65, distributions are penalty-free even if not used for qualified medical expenses (however, ordinary income tax will apply if the distribution is for non-medical expenses).
How Does This Actually Work – My Use of GEHA HDHP w/ HSA in 2025
(1) I was covered by the FEHB Plan #341 (GEHA HDHP).
(2) I paid bi-weekly health insurance premiums of $76.27.
(3) Every month, I received a deposit of $83.33 in my HSA Bank account. This amount represents the monthly portion of the $1,000 (self-only) premium pass-through (PPT) feature where a portion of my premium was returned to me. PPT in 2026 for self-only will remain $1,000 and for family plans will be $2,000.
(4) Since the total 2025 HSA contribution limit was $4,300 for self-only, and the $1,000 PPT counts towards the IRS limit, I contributed the remaining allowable amount ($3,300) from my paycheck throughout the year. This $3,300 worth of personal HSA contributions was not subject to payroll tax and it reduced my federal and state taxable income ($1,234 less tax paid). Contributions went straight from my paycheck to the custodian, HSA Bank.
(5) When the $83.33 PPT and my $3,300 personal contributions hit my HSA Bank account, they automatically got invested in a low-cost passive index fund (not an investment recommendation). This money is now invested and will grow tax-free, similar to a Roth IRA, but better since those are pre-tax dollars going in. Note: You don’t have to invest your HSA money, you could leave the HSA dollars in cash and use your HSA debit card to pay for QMEs.
(6) When I had medical expenses throughout the year, I paid OOP, recorded it on a spreadsheet, and saved a picture of the receipt in a cloud folder. I can reimburse myself for these expenses at any time, even if it’s 20-years from now and I’m no longer a government employee and not covered by an HSA eligible plan. The HSA money is mine to use for medical expenses, reimburse myself for expenses paid OOP, or use for anything after age 65 without penalty.
HSA Bank & HSA Invest
Your personal contributions (not the PPT) can go to any HSA custodian, or be rolled over from HSA Bank to a different custodian (Fidelity, Lively, etc.). However, with the FEHB GEHA plan, the $1,000/$2,000 PPT will always be sent to HSA Bank first. You can then choose to keep the money in that HSA Bank account as cash, invest it via the HSA Invest brokerage platform, or roll it out to an outside HSA custodian.
I personally have only used HSA Bank and their brokerage account platform HSA Invest. Why? I prefer to keep my financial life as simple as possible and I haven’t been charged any account fees (just the regular expense ratio fee associated with the index fund I invest in). I have one login and all of my HSA dollars under one roof. This works for me. No need to mess around with electronic transfers or a rollover.
As of now, there are no fees to use HSA Invest for GEHA members who choose their own investments (the “Choice” option). WARNING: I do not know if this will remain the case.
There are three options with HSA Invest.
(1) Choice: For those who are comfortable picking their own investments. The website lists this option as having a 0.10% fee, but GEHA members pay 0.00% fee, at least through 2025. I am unsure if the fee will continue to be waived as it has the last two years.
(2) Select: If you want guidance and a recommended list of funds to invest in, you can use the “Select” option which costs 0.25% annually.
(3) Managed: If you want your investments managed by an investment advisory firm, you can pay them 0.35% annually.
According to their website, if you have a “Managed” or “Select” account with a cash balance of $7,500 or more, the fees will be waived for that quarter.
This is what I see when I log in and click "fees".
Let’s talk fees in terms of dollars. The fee listed is the percentage that will be charged for each dollar in your account. So, if you have $10,000 in your HSA and pick the “Select” option, which charges 0.25%, you would pay $25 for the year (10000 x .0025), billed $6.25 quarterly.
I’ve been using HSA Invest since the initial launch and have had no issues. I transferred my money over from my Charles Schwab HSA to HSA Bank, enrolled in HSA Invest, selected the one mutual fund that I choose to invest in, and set up automatic investing for every contribution and PPT deposit. Having HSA Invest versus Charles Schwab results in one less log-in for me to keep track of, keeps my financial life simple, and has cost me $0 (as of today).
How Much Can You Invest in 2026
$4,400 for self-only plans and $8,750 for family plans. Individuals who will turn 55 in calendar year 2026 can contribute an additional $1,000 catch-up. For spouses with family coverage, each spouse can contribute an additional $1,000 to their individual HSA account. Remember, these contribution amounts are reduced by the PPT.
HSA Eligibility
In order to contribute to an HSA, you must meet the IRS eligibility:
1. You must be covered by a High Deductible Health Plan (HDHP)
2. You cannot have other health insurance coverage
3. You cannot be enrolled in Medicare
4. You cannot be claimed as a dependent on someone else’s tax return
That’s it!
What if I retire? What if I’m already retired? What if I change states? What I’m abducted by aliens? What if a solar eclipse occurs during a waxing gibbous moon phase? None of those things matter (for HSA purposes). If you meet the four criteria above, you can contribute to an HSA. I know many federal retirees who have crossed the finish line, aren’t working a post-retirement job, and still contribute to their HSA (earned income is not a requirement).
Net Annual Cost Comparison
This one requires a visual. Nobody likes the sound of “high-deductible” ...it sounds expensive. Just like with any type of insurance, the deductible is the amount you pay out-of-pocket before plan benefits kick-in. Let’s look at three FEHB plans for 2026 and their deductibles.
GEHA HDHP Self (Plan #341): $1,800 deductible
Blue Cross Blue Shield (BCBS) Basic (Plan #111): $0 deductible
Blue Cross Blue Shield (BCBS) Standard (Plan #104): $350 deductible
Yikes! Look at the $1,800 deductible for the HDHP plan versus the $0 deductible for BCBS Basic. If we only cared about the deductible, it appears that BCBS Basic would be the winner. But what about the net annual cost? In order to find out the net annual cost, we need to look at the bi-weekly premiums coming out of each paycheck, any premium amount returned, and any possible tax benefits.
What if you want to use the HSA but don’t want to invest the $3,400 additional? Even with hitting the annual $1,800 deductible, you’d still be spending less on a net basis than some other plans, just based on the bi-weekly premium savings and premium pass-through.
Now that we have a clearer picture of the true cost, even if we have to pay the full annual deductible, the bi-weekly premium savings alone may be enough to convince you to consider an HDHP. But don’t forget, the real magic with the HSA is investing your contribution plus the premium pass-through.
No federal tax on the way in.
No state tax on the way in (except for NJ & CA).
No payroll tax on the way in.
No tax along the way as your money grows.
No tax on the way out if used for qualified medical expenses. Again, there are a ton of things that qualify as QME, to include Medicare premiums. We’re all going to get old someday. Don’t wait until you’re old to figure out how you’re going to take care of your old self.
There is no other account in existence that offers the same benefits.
Who Do I Think an HSA is Best For?
Those who are generally healthy, have an emergency fund, and want to save/invest more in a tax-free account.
If your maximum out-of-pocket expense is $6,000 (whether you have an HDHP or not), you should have at least $6,000 in your completely safe, liquid, cash bucket.
What if you ARE NOT covered by a High-Deductible Health Plan anymore?
The HSA is yours to keep and use as you see fit. Just because you don’t have HDHP coverage doesn’t mean your HSA goes away. The dollars in that account are still yours and can still be used for the same purposes (qualified medical expenses and for any reason upon reaching age 65).
What if my spouse has their own non-HDHP insurance through their employer?
That’s okay. As long as (1) YOU are covered by an HDHP and (2) your spouse’s non-HDHP plan DOES NOT cover you, you’re still eligible and can contribute up to the family limit. This one can get confusing, so here’s the exact language from the IRS.
Is an HSA the Same as an FSA?
No! Both Flexible Spending Accounts (FSA) and HSAs allow for the use of pre-tax dollars to pay for qualified medical expenses. However, the HSA has additional benefits that an FSA does not have. Also, look at the name. One is geared towards SPENDING and the other is focused on SAVING.
Qualified Medical Expenses
QMEs include items far beyond just typical doctor’s office visits and prescriptions. HSA funds can be used to pay for cold medicine, pain reliever, sleep aids, allergy medication, eye drops, over-the-counter drugs, certain skincare products, heartburn tablets, acupuncture, band-aids, laser eye surgery, braces, sunscreen, contraceptives, after-sun aloe, feminine hygiene products, and many more. If you have a family plan, expenses incurred for you, your spouse, and dependents are all eligible.
Preventative Care
Please don’t ignore your health because you’re worried about OOP costs. With the HDHP, things like annual physical exams, routine screenings, immunizations, two dental cleanings, and other preventative care treatments are generally covered by insurance before hitting your deductible, without any cost sharing, coinsurance, or copays.
HDHP Costs
If your goal is to have the absolute least amount of OOP expense, an HDHP is probably not the right fit. Everyone’s health situation and medical needs are different. Even someone in great health may not want to roll the dice on the possibility of paying OOP regardless of the lower premiums, tax savings, and investment feature.
However, make sure you do your homework using the OPM FEHB plan comparison tool. There may be plans that are not HDHP, but still have high deductibles close to the HDHP level, without any of the HDHP/HSA benefits. Don’t forget to look at your net annual cost. Once you factor in the HDHP’s $1,000/$2,000 PPT, lower bi-weekly premiums, and tax savings, your non-HDHP plan could cost you more than the HDHP.
Deductible
This is the amount you pay out-of-pocket before plan benefits begin. The 2026 GEHA HDHP in-network deductible is $1,800 for self-only and $3,600 for self plus one and family coverage.
Coinsurance
Coinsurance kicks in after you’ve met your deductible. Primary care office visits, labs, x-rays, emergency room visits, and specialists have a 5% coinsurance if in-network. If you visit the doctor's office and the bill is $100, but the in-network provider has an agreement with GEHA to accept $80 as the allowable amount, you'll pay $80 if you haven't met your deductible yet. This $80 will be applied towards your annual deductible. If you have met your annual deductible ($1,800/$3,600) and the coinsurance is 5% of the allowable amount, you would pay $4.
Prescriptions
You’ll most likely pay between 25% - 40% coinsurance with in-network providers. See the Summary of Benefits and Coverage for full details.
Maximum Out-of-Pocket/Catastrophic Protection
This is the maximum you’ll pay for coinsurance, co-pays, and deductibles (medical care and prescriptions) combined before insurance pays 100% of covered services. The in-network 2026 OOP maximum is $6,000 for self-only and $12,000 for family coverage. Out of network is $8,500 and $17,000. Remember, this catastrophic limit is for coinsurance, co-pays, and deductibles combined. Insurance will still kick-in once you reach your annual $1,800/$3,600 deductible.
Individual Deductible vs. Individual Out-of-Pocket
Below is a screenshot from my GEHA HDHP portal. You can see that I met the $1,650 deductible this year. After reaching my deductible, I paid an additional $141.68 in coinsurance. Remember, even after reaching your deductible you still may have to pay coinsurance, which for all of my medical needs was 5% of the amount due to the provider. In the next section I’ll show you exactly how this worked with my colonoscopy.
From GEHA: “Individual deductible vs Family deductible: An individual deductible is what you must pay for health care services before your plan begins to pay. A family deductible is what your family must pay for health care services before your plan begins to pay.”
From GEHA: “Individual out-of-pocket vs Family out-of-pocket: An individual out-of-pocket is the maximum amount that you must pay for health care services (usually for the year) before your plan begins pays 100 percent of the eligible care you receive. A family out-of-pocket is the maximum amount your family must pay for health care services (usually for the year) before your plan begins your plan pays 100 percent of the eligible care you receive. This never includes premium, balance-billed charges, or health care services your plan doesn’t cover. Some plans may not count all your co-payments, deductibles, co-insurance payments, out-of-network payments, or other expenses towards this limit.”
My Colonoscopy Experience (the money part, not the medical part)
After my colonoscopy, I received multiple Explanation of Benefits (EOB) statements from GEHA, all with separate claim numbers.
Claim #1
When this was billed, I was about $190 short of meeting my $1,650 annual deductible. This is why you can see amounts ($41.99 & $143.18) in the “applied to deductible” column.
Claim #2
When this was billed, I had met my annual $1,650 deductible. This is why you see no amount in the “applied to deductible” column. Notice there is still coinsurance. The “amount due to provider” for anesthesia services was $446.40, the coinsurance is 5%, which means I owed $22.32.
Claim #3
When this was billed, I had met my annual $1,650 deductible. This is why you see no amount in the “applied to deductible” column. Notice there is still coinsurance. The “amount due to provider” for surgery was $292.58, the coinsurance is 5%, which means I owed $14.63.
What If I Withdraw HSA Money Before Age 65 for Non-Medical Purposes?Generally, this will cost you ordinary income tax and a 20% penalty, UNLESS you have prior unreimbursed medical expenses that you incurred and paid after starting your HSA.
Here’s an example of how your money is NOT locked up.
-Let’s say Maureen first contributed to an HSA starting in 2020.
-Since 2020, between her contributions, premium pass-through, and investment growth, her account has grown to $20,000.
-Since 2020, Maureen has paid for $10,000 worth of qualified medical expenses out-of-pocket.
-In 2025, Maureen decides she wants to go on her dream vacation to Italy, which is going to cost $5,000.
-Maureen can take $5,000 from her HSA account to pay for this vacation. Wait, what?! How? While good for her mental health, a trip to Italy is not a qualified medical expense.
-The $5,000 Maureen distributes from her HSA to pay for her vacation isn’t technically for her vacation on paper, it’s to reimburse herself for prior medical expenses she paid out-of-pocket. She saved her receipts/EOBs and has a spreadsheet proving she paid for these expenses. If she’s ever audited, she can prove to the IRS that the $5,000 distribution was a reimbursement, and therefore not subject to tax or penalty.
-Even after distributing this $5,000, she has an additional $5,000 that she can distribute in the future for any reason (medical expenses, vacation, emergency, new vehicle) because prior to her Italian getaway, she had $10,000 total unreimbursed medical expenses that she paid out-of-pocket.
What If I Don’t Want to Invest the Money?
You don’t have to. You can still come out ahead by paying for QMEs with dollars that were never taxed. This approach would be similar to an FSA.
What If I’m Not Healthy?
HDHPs may actually protect you if you reach your “catastrophic limit” for the year. While this is a highly personal decision, it’s important to know that most traditional insurance policies won’t exclude co-pays and drug costs after hitting the annual catastrophic limit. This means that with a traditional plan, you could pay your catastrophic limit and still be on the hook for co-pays and prescriptions. On the other hand, OPM states that, “With an HDHP, once you hit the catastrophic limit, there is no out-of-pocket expense for covered in-network services.”
What If I’m Too Healthy?
Medicare Part B
While you may be a top-notch physical specimen today, it’s unlikely that you’ll never need money for any QME. Remember, you can always reimburse yourself at any time in the future for those every day common QMEs. And what about Medicare Part B? Many feds who have FEHB coverage and Medicare Part B in retirement report no additional out-of-pocket costs above their monthly premiums.
How much will you need to have saved/invested to comfortably pay for Part B? From 1966-2017, Medicare Part B premiums increased approximately 7.7% on a compound annualized basis.
2023 Part B Premium: $164.90
2024 Part B Premium: $174.70 (5.9% increase)
2025 Part B Premium: $185.00 (5.9% increase)
2026 Part B Premium: $206.50 (11.6% increase)
Let’s be optimistic for a moment and say the Part B premium will only increase by 5% each year going forward. If this happens, what would Part B premiums look like at age 65 for the individuals still working today?
50-year-old in 2026 would pay $429.30 at age 65 (year 2041), totaling $5,151.58 for the year. If increases continued at 5% annually and they lived until age 85, Part B premiums over their lifetime would cost $184,010.73.
40-year-old in 2026 would pay $699.28 at age 65 (year 2051), totaling $8,391.39 for the year. If increases continued at 5% annually and they lived until age 85, Part B premiums over their lifetime would cost $299,734.08.
30-year-old in 2026 would pay $1,139.06 at age 65 (year 2061), totaling $13,668.69 for the year. If increases continued at 5% annually and they lived until age 85, Part B premiums over their lifetime would cost $488,235.24.
20-year-old in 2026 would pay $1,855.40 at age 65 (year 2071), totaling $22,264.85 for the year. If increases continued at 5% annually and they lived until age 85, Part B premiums over their lifetime would cost $795,283.76.
A caveat with these numbers. We’re assuming a constant 5% annual increase, which is unlikely. Some years may be less, some may be more. We’re also assuming you get no subsidies, reimbursements, or incentive payments.
Finally, we haven’t factored in any Income Related Monthly Adjustment Amount (IRMAA). IRMAA is an additional tax/surcharge on your Medicare Part B and Part D premiums once you reach certain income thresholds. There is a two-year lookback when figuring out if you have to pay IRMAA. For 2025 IRMAA, if in 2023 you filed your taxes as Married Filing Jointly and had $212,000 or less Modified Adjusted Gross Income (MAGI), you have $0 IRMAA surcharge. If in 2023, you filed your taxes as single and had $106,000 or less MAGI, you have $0 IRMAA surcharge in 2025. There are five income brackets that apply different IRMAA amounts on top of your base Part B/D premium.
Long-Term Care
You can also use HSA dollars to pay for long-term care (LTC) insurance premiums, which have become quite expensive over the last few years. Bottom line: The odds are good that sometime before you die, you’ll have some medical expenses that could be paid with tax-free money that compounded for decades. Worse-case scenario, at age 65 your HSA changes to a quasi-traditional IRA where you can use the money for any purpose (not just QMEs) and you’ll only pay income tax (no 20% penalty for non-QME spending). That’s a good deal!
HSA Cons
(1) Generally speaking, California & New Jersey don’t conform to the federal standard and fail to recognize HSAs. Your HSA contributions will not reduce your state income tax. Dividends, interest, and capital gains within your HSA brokerage account may be taxable each year at the state level for NJ and CA. Consult with your financial professional. Don’t let this stop you. I still had an HSA when I lived in New Jersey because the benefits far outweighed the state tax annoyance.
(2) If you die, your spouse can inherit your HSA as if it was their own. If they die, or if you have a primary beneficiary who is not your spouse, the account is no longer classified as an HSA when you die. When this happens, the fair market value of the account becomes taxable to the beneficiary in the year in which you die. This could create a tax issue for non-spouse beneficiaries. When you die, a non-spouse beneficiary can still use the HSA dollars to pay for your qualified medical expenses that were incurred, but not paid, prior to your death. These expenses can be paid up to one year after your death.
Tax Time
You’ll receive a 5498-SA from your HSA custodian showing how much you contributed. A 1099-SA will be issued if you took distributions from your account. You or your accountant will need to file IRS Form 8889 documenting your contributions, your employer’s contributions, any distributions taken, and any penalties owed. You don’t have to provide receipts at tax time showing that you paid for qualified medical expenses, however, you’ll still want to save the receipts and have a good tracking system in place in the event of an audit.
Tax Double-Dipping
(1) Deducting Contributions Twice
If you contribute to your HSA via payroll deduction, DO NOT report those same contributions on Form 8889 Part I Line 2. You already got a deduction for those contributions via payroll since they reduced the taxable income reported on your W-2. The instructions for line 2 say “Do not include employer contributions (see line 9). It’s important to know that “employer contributions” INCLUDES what YOU contributed through your employer (a.k.a. via payroll deduction).
This is an example showing an employee who contributed $4,150 (including the premium pass-through) via payroll deduction. They do not get any additional deduction at tax time (line 13) because they already had their income reduced by their HSA contributions, reflected in Box 1 of their W-2.
This is an example showing an employee who contributed $3,150 from an external bank account, not via payroll deduction (line 2), plus the $1,000 premium pass-through (line 9). They get to deduct $3,150 from their income (line 13) because they only got a tax deduction on the $1,000 premium pass-through. They did not yet get a tax deduction because they used post-tax dollars from an external bank account to contribute to their HSA.
(2) Reimbursing & Adding the Same Expenses to Itemized Deductions
When you file your taxes, you can either take the standard deduction or you can itemize your deductions. Generally, you would only want to itemize if your itemized deductions will exceed the standard deduction. Here are the new standard deduction amounts under the One Big Beautiful Bill Act.
Let’s say you had a lot of unreimbursed medical expenses this year. If those unreimbursed medical expenses exceed 7.5% of your Adjusted Gross Income (AGI), you can itemize those expenses on Schedule A, along with other itemized deductions (state & local tax, home mortgage interest, charitable contributions, etc.).
To keep things very simple – you cannot use the same expense to justify two tax benefits. Itemized medical expenses on Schedule A are those that have NOT been reimbursed. It says right on the form, “Caution: Do not include expenses reimbursed or paid by other.”
So, if you have HSA money and you plan to itemize your deductions, you have two choices with those medical/dental expenses. You can only choose either Option A or Option B – not both.
Option A: Pay for the expense now with HSA money or reimburse yourself later with HSA money.
-OR-
Option B: Itemize the unreimbursed expense on Schedule A.
Don't let any of this tax stuff intimidate you. If you use tax software or have an accountant, this stuff will be easy to report.
Big Picture
You can view your HSA as a quasi-retirement account with an added bonus of immediate use for qualified medical expenses if needed, or reimbursement for medical expenses in the future. At some point we will all have some type of medical expense, whether it’s long-term care, Medicare premiums, or extra sunscreen for those retirement days sitting on the beach with an umbrella drink. If your family’s health situation allows, you may want to consider taking advantage of the immediate tax savings, lower premiums, return of premium via PPT, and tax-free investment growth.
About the Author
Tyler Weerden is a fee-only financial planner and the owner of Layered Financial, a Registered Investment Advisory firm based in Arlington, Virginia. In addition to being a financial planner, Tyler is a full-time federal agent. He holds a Bachelor of Science degree, a Master of Science degree, passed the Series 65 exam, and is a Certified Fraud Examiner (CFE). Tyler is the sole Investment Adviser Representative at Layered Financial.
Prior to becoming a federal agent, Tyler served as a state trooper, local police officer, and was a member of the U.S. Army National Guard. He has served in both domestic and overseas Foreign Service assignments. Tyler has experience with local, state, and federal pension systems, 457(b) Deferred Compensation, the federal Thrift Savings Plan (TSP), Individual Retirement Accounts (IRAs), Health Savings Accounts (HSAs), and various investment options to include rental real estate.
Disclaimer
Layered Financial is a Registered Investment Adviser registered with the Commonwealth of Virginia and State of Texas. Registration does not imply a certain level of skill or training. The views and opinions expressed are as of the date of publication and are subject to change. The content of this publication is for informational or educational purposes only. This content is not intended as individualized investment advice, or as tax, accounting, or legal advice. Nothing in this article should be seen as a recommendation or advertisement. Layered Financial and its Investment Advisor Representatives have no third-party affiliations and do not receive any commissions, fees, direct compensation, indirect compensation, or any benefit from any outside individuals or companies. Although we gather information from sources that we deem to be reliable, we cannot guarantee the accuracy, timeliness, or completeness of any information prepared by any unaffiliated third-party. When specific investments, types of investments, products, or companies are mentioned, such mention is not intended to be a recommendation or endorsement to buy or sell the specific investment, solicit the business, or use that product. The author of this publication may hold positions in investments or types of investments mentioned in articles. This information should not be relied upon as the sole factor in an investment-making decision. Readers are encouraged to consult with professional financial, accounting, tax, or legal advisers to address their specific needs and circumstances.
© 2025 Tyler Weerden. All rights reserved. This article may not be reproduced without express written consent from Tyler Weerden.