Health Savings Accounts

Hi, thank you for looking at the Coldwater Direct Primary Care blog- Health Savings Accounts. In these articles, we highlight healthcare news and knowledge for medical conditions. No junk science, just the good stuff! Coldwater Direct Primary Care serves patients in Coldwater, throughout Branch, Hillsdale, and Calhoun Counties, as well as northern Indiana giving families and employers peace of mind about healthcare costs by providing affordable and accessible primary care services.

Health Savings Accounts

The number of people having access to and choosing a high-deductible health insurance (HDHP) plan is likely to increase in 2026 and well into the future. If this first sentence doesn’t age well, I will be VERY surprised. With a HDHP, you can still have health insurance against catastrophic illness or injury, but now your insurance at a lower rate (lower monthly premium). You may already have one. I know my family does. 

How Health Savings Accounts Work

These plans basically allow you to 'self-insure' or 'shoulder' part of your healthcare costs & risk. To make these 'high-deductible' plans more affordable and attractive to people, Health Savings Accounts (HSA) were created as a part of a Medicare Modernization Act of 2003 to help people 'handle' the out-of-pocket expenses. With a HSA, as of 2026, an individual can set aside $4,400 and a family can set aside $8,750. If you are 55 or over, you can set aside an additional $1,000 to each of those. If you need to use your HSA money for healthcare expenses such as at Coldwater Direct Primary Care, or any other medical expenses, please do so. 

Best of Both Worlds

However, say you have the financial flexibility to pay your actual medical expenses (ie- your medical membership at Coldwater Direct Primary Care, dental appointments, medications, etc) with cash / credit card / checking accounts- NOT your HSA, carefully asking for, saving, and organizing your payment receipts / invoices (once yearly is sufficient for our clinic). Then, instead of parking your money in a low-yield FDIC insured account, you fully fund your HSA, year after year, and invest your HSA money in low-cost index funds letting your HSA grow and compound. This essentially creates a 'third' avenue of tax-advantaged savings after 401k / 403b accounts and Roth IRAs. Here is the interesting part- in a sense, you have a ROTH IRA that you get to take the money out eventually tax-free and regular IRA in that you get to deduct the contributions to it, the best of both worlds.

Funds For When You Need It

If you ever needed the money for medical expenses (eg- surgery, cancer, other major health event), it is still yours. But if not needed, the money could grow tax-free to a large amount. ---> When you are ready <---simply pull out your medical receipts and reimburse yourself from the HSA leaving any balance for future use. 'When you are ready' is crucial because you don't have to wait until 65 to pull that money out tax free. You have already been paying for those qualified medical expenses. Use that HSA money and fund your kids' wedding, buy a car, whatever- it's yours. The IRS only cares if you have the receipts or invoices for the qualified medical expenses you have incurred. 

What are qualified medical expenses? 

It’s a long list from the IRS and includes things like physician services, blood tests, prescription drugs, and imaging tests. Qualified or eligible medical expenses are described by the IRS code section 213(d). 

Flexible Spending Accounts

HSAs are often confused with Flexible Spending Accounts (FSAs), though they are not at all the same. The key difference with a FSA is that any money that you don't spend in the year that you fund the account is forfeited. Poof, gone. The money in a HSA remains yours until you use it. FSAs also have account managers (another name: bean counters), who can approve / not approve what you believe is a qualified medical expense. This can run counter to your goals and given an option, selecting a HSA is always a better long-term choice.

Thank you for reading

Coldwater Direct Primary Care