Self-Employed? HSAs Just Got More Accessible
- Marc Lowe
- 4 days ago
- 5 min read
Not long ago, I sat across the table from a business owner preparing for the next phase of life.
Their business was doing well. Investments were solid. Retirement savings were on track.
But when we began reviewing healthcare planning — one of the largest expenses most people will face in retirement — something surprising came up.
They had never used a Health Savings Account (HSA).
Not because they didn’t want to. They simply assumed they weren’t eligible.
And that assumption is more common than you might think.
For years, HSAs were mostly associated with traditional high-deductible employer health plans. But today, eligibility is expanding — and many professionals and business owners who previously overlooked HSAs may now have access through ACA marketplace plans as well.
Understanding this shift could unlock one of the most tax-efficient planning opportunities available.
Why Healthcare Planning Matters More Than Ever
Healthcare is one of the biggest — and most unpredictable — expenses in retirement.
Medicare doesn’t cover everything. Out-of-pocket costs, premiums, long-term care, and specialized treatments can create meaningful financial pressure over time.
That’s why planning ahead with dedicated healthcare assets can be powerful.
Health Savings Accounts were originally created to help individuals put aside money for medical expenses — but today, many strategic planners view them as a hybrid between a healthcare tool and a retirement account.
What Is a Health Savings Account (HSA)?
A Health Savings Account is a tax-advantaged savings or investment account designed for qualified medical expenses.
Historically, HSAs were only available to individuals enrolled in High Deductible Health Plans (HDHPs), which typically feature:
Lower monthly premiums
Higher annual deductibles
Greater responsibility for initial healthcare costs
However, eligibility has expanded in meaningful ways.
New Update: ACA Bronze and Catastrophic Plans Now Compatible with HSAs
According to Healthcare.gov, starting in 2026:
All Bronze plans and Catastrophic plans offered through the Affordable Care Act marketplace are compatible with Health Savings Accounts.
This is a significant shift.
Previously, many individuals shopping on the ACA marketplace assumed HSAs were off the table. Now, more people — including self-employed professionals and business owners — may have access.
Here’s how these plans generally work:
Bronze Plans
Typically have the lowest monthly premiums
Higher out-of-pocket costs when care is needed
Often cover certain services before the deductible
Designed for individuals who want protection against major medical events while keeping premiums lower
Catastrophic Plans
Lower monthly premiums but higher deductibles
Cover at least three primary care visits annually before the deductible is met
Available to individuals under age 30 or those qualifying for hardship or affordability exemptions
(Information sourced from Healthcare.gov HSA eligibility guidance.)
For many people, especially those managing fluctuating income or self-employment, this expanded compatibility opens new strategic planning opportunities.
The Triple Tax Advantage (Why HSAs Are So Powerful)
HSAs offer something rare in financial planning: three layers of tax benefits.
Contributions reduce taxable income when made
Investments grow tax-free
Withdrawals are tax-free when used for qualified medical expenses
Most accounts provide one or two tax advantages — HSAs provide all three.
That combination makes them uniquely powerful when integrated into a broader retirement strategy.
Why HSAs Can Become a Retirement Strategy — Not Just a Medical Account
When I reviewed the business owner’s plan, they had been paying medical expenses out of pocket for years while missing the opportunity to build a tax-free healthcare reserve.
This is incredibly common.
Many people treat HSAs like a pass-through account — contributing and immediately spending. But when funds remain invested long term, something important happens:
Compounding begins to work.
Because growth is tax-free, the account has the potential to accumulate a meaningful pool of funds dedicated to healthcare expenses in retirement, such as:
Medicare premiums
Long-term care costs
Prescription drugs
Therapy or specialist visits
Hearing aids, dental care, and more
Healthcare expenses don’t disappear after retirement — and having tax-free assets earmarked for these costs creates flexibility when income planning becomes more complex.
HSA Contribution Limits (2026)
Contribution limits adjust annually for inflation:
Self-only coverage: up to $4,400
Family coverage: up to $8,750
Age 55+ catch-up contribution: additional $1,000
Consistent contributions over time can build significant tax-advantaged savings.
How HSAs Work in Practice
HSAs function like a combination of a savings account and an investment account.
Most offer:
Online access
Debit cards for qualified expenses
Investment options once minimum balances are reached
Qualified expenses include:
Doctor visits and copays
Psychological or psychiatric care
Prescription medications
Acupuncture
Hearing aids and other medical equipment
One overlooked strategy: saving receipts. You can reimburse yourself later for qualified expenses incurred after opening the HSA — allowing funds to stay invested longer.
Important Rules and Limitations
As with any tax-advantaged account:
Withdrawals before age 65 for non-medical expenses trigger income tax plus a 20% penalty.
After age 65, non-medical withdrawals are taxed as income but no longer penalized.
This creates flexibility while preserving strong incentives to use the account for healthcare planning.
The Bottom Line: A Hidden Opportunity Inside Your Financial Plan
The business owner I met with walked away with a new perspective.
They didn’t need a more complex investment strategy — they needed to use tools already available to them more effectively.
Health Savings Accounts may be one of the most underutilized planning tools available today.
Used strategically, they can:
Reduce taxes today
Build tax-free assets for tomorrow
Provide flexibility when healthcare costs inevitably rise
And with expanding eligibility through ACA Bronze and Catastrophic plans, more people than ever may now have access.
About the Author
Marc Lowe, CFP® is a fee-only fiduciary advisor based in Waterford, CT, helping pre-retirees & small business owners make smarter financial decisions.
The information presented in this article is the opinion of the author and does not reflect the views of any other person or entity unless specified. The information provided is believed to be reliable and obtained from reliable sources, but no liability is accepted for inaccuracies. The information provided is for informational purposes and should not be construed as advice. Advisory services offered through In The Money Retirement, an investment adviser registered with the state of Connecticut. The information linked to on third-party sites is being provided strictly as a courtesy and convenience. We make no representation as to the completeness or accuracy of information provided at these websites. When you access these websites, you are leaving our website and assume any and all responsibility and risk for use of the web sites you are visiting.The tax and estate planning information offered by the advisor is general in nature. It is provided for informational purposes only and should not be construed as legal or tax advice. Always consult an attorney or tax professional regarding your specific legal or tax situation.
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