Health savings accounts for individuals


Save for medical expenses, manage your health care spending, and gain tax advantages with a Health Savings Account (HSA). Paired with a high-deductible health plan, an HSA is a tax-free way to pay and save for current and future medical expenses.

You can pay your medical expenses, including physician visits and prescription drugs, tax-free from your HSA. Plus, your money accumulates in low-cost Vanguard funds, meaning you'll keep more of your investment returns.

HSAs were introduced in 2004 to help address the high costs of health insurance. To qualify for an HSA, you:

  1. Must be enrolled in a high-deductible health plan (HDHP) that does not cover all medical expenses.
  2. Cannot be covered under another health insurance plan, including Medicare coverage, with certain exceptions.
  3. Cannot be claimed as a dependant on someone else's tax return.

Why should you consider an HSA?

HSAs offer many benefits to investors. The accounts are:

  • "Triple tax-advantaged."
    • Your account contributions are pre-tax or tax-deductible. (There are annual limits to the amount of contributions.)
    • All earnings and interest are tax-free.
    • Any withdrawals for qualified medical expenses are tax-free. Plus, once you reach age 65, all nonmedical withdrawals are taxed at your current tax rate, just like a Traditional IRA.
  • Fully portable. As with an IRA, you own the account outright and can roll it over to another HSA custodian, subject to some restrictions.
  • Designed for the future. Your contributions and earnings, combined with the power of compounding, help your account grow over time. And unlike IRAs, there are no required minimum distribution (RMD) rules.
  • Not limited by your income. No matter how much you earn, if you meet the other HSA qualifications, you can open an account. (Annual contribution limits apply.)

Why should employers consider HSAs for their employees?

Offering HSAs to employees as an alternative to traditional health insurance can help increase an employer's flexibility in managing health care costs. HSAs offer employers:

  • Lower premiums on employees' health plans. Premiums are lower because all HSA participants must enroll in an HDHP.
  • Lower payroll taxes. All HSA contributions are pre-tax, reducing gross payroll.

Getting started

To open an HSA featuring Vanguard mutual funds, select the appropriate link on the right side of the screen and complete an application.


  • This article is intended to provide general information and should not be considered tax advice. You should consult a tax advisor for specific information on how tax laws apply to your situation.
  • Mutual funds, like all investments, are subject to risk.
  • The links to the Health Savings Administrators website take you to a site outside Vanguard is not responsible for the content of third-party websites.