Quit Like a Millionaire: No Gimmicks, Luck, or Trust Fund Required

by Kristy Shen

An HSA is a type of investment account that’s used for health expenses. Unlike a 401(k), it’s not tied to your employer, so you can open one at any bank or brokerage account. Here’s how an HSA works (as of 2019): To be eligible, your health insurance plan must have a deductible of at least $1,350, or $2,700 for a family. You can contribute up to $3,500 per year, or $7,000 for a family. Your contributions are pretax, similar to a 401(k) or a traditional IRA, meaning that you will get a tax deduction. Investment growth is tax-free. You can withdraw your money tax-free for qualified medical expenses. So an HSA combines the best of the 401(k) and the Roth IRA, in that it allows tax-deductible contributions, tax-free growth, and tax-free withdrawals, but only for medical expenses.