How much should I put in my HSA?

If you've decided to save in a health savings account (HSA), your next move is to figure out how much. That involves a bit of math, but don’t worry! We’ll help you think it through.

The good news is that an HSA helps you cover costs now plus accumulate funds to cover your expenses in the future. As you think about your savings strategy, think about an approach that balances both of these needs. Remember: It's always a good idea to focus on the “saving” versus “spending” aspect of your HSA; that way you’ll have a better chance of having what you need, when you need it.

Let the savings begin – a checklist:

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Think ahead to how much you may need to spend on health expenses this year.
Put in at least the amount of your deductible.
Once you determine the cash amount, invest the rest.
Revisit your cash versus investing approach in your HSA each year.
If you can, max it out!

Eyes on the prize: Saving for retirement

Remember: An HSA is a key part of a solid financial strategy for retirement, and the triple tax advantages may help you stretch your retirement savings dollar further. No matter what your stage in life now, ultimately you will need to pay for health care expenses in retirement. This is an area where people tend to underestimate. A quick reality check: Studies have shown that a couple retiring at age 65 may need upwards of $273,000 to cover out-of-pocket expenses while retired1. That means saving early, and often. Keep this number in your mind as an overall savings goal to shoot for as you manage your HSA, year after year.

Keep going, keep saving

Don’t worry if you don’t get it exactly right on your first try. Bottom line: Save. You can – and should – increase your contribution amount later when you have a better sense of your needs and a little more experience working with your HSA. And, you can increase the amount you’re contributing throughout the year (check with your employer for specific timing).

Want to learn more? Learn how to maximize your HSA here.

1Sources: Employee Benefits Research Institute, January 2017. A 65-year-old couple, both with median drug expenses would need $273,000 to have a 90% chance of having enough money to cover health care expenses (excluding long-term care) in retirement. Savings Needed for Medigap Premiums, Medicare Part B Premiums, Medicare Part D Premiums and Out-of-Pocket Drug Expenses for Retirement at age 65 in 2017.