How To Use an HSA To Pay for Long Term Care Insurance Premiums
A Health Savings Account (HSA) can be a powerful tool for saving and planning for your future health care costs.
You can use an HSA for many different types of medical expenses, including Long-Term Care Insurance premiums.
Understanding how to use an HSA effectively can have a huge positive impact on your retirement plan, helping to lower taxes, protect assets, and provide peace of mind.
What Is a Health Savings Account (HSA)
A Health Savings Account (HSA) is a tax-advantaged personal savings account intended to cover medical needs. You can use an HSA for qualified medical expenses, such as insurance premiums, copays, or deductibles.
Money you contribute to your HSA goes in pre-tax, grows tax-free if invested, and can be withdrawn tax-free when used for qualified expenses.
HSAs are not tied down to any job or circumstance, and can continue to grow for life. There is no "use it or lose it" expectation.
How To Use an HSA to Pay for Long-Term Care Insurance
Many people don’t realize that they can use their HSA funds to pay for qualified Long-Term Care (LTC) Insurance premiums. Using an HSA for Long-Term Care Insurance can make long-term care coverage more affordable.
The IRS allows you to reimburse yourself from your HSA for qualified Long-Term Care (LTC) Insurance premiums, up to annual limits based on your age. These limits align with the maximum tax-deductible amounts set by the IRS.
Total Amount That Can Be Deducted From Long-Term Care Insurance Premiums Either By Itemized Tax Deduction or Reimbursement With An HSA in 2025 and 2026
|
Age attained before the close of the tax year |
2025 Tax Year |
2026 Tax Year |
Change |
|
40 or younger |
$480 |
$500 |
+$20 |
|
41 – 50 |
$900 |
$930 |
+$30 |
|
51 – 60 |
$1,800 |
$1,860 |
+$60 |
|
61 – 70 |
$4,810 |
$4,960 |
+$150 |
|
71 or older |
$6,020 |
$6,200 |
+$180 |
Health Savings Account Contribution Limits in 2025 and 2026
In 2025, you could contribute $4,300 for individual coverage or $8,550 for family coverage. For those age 55 and older, you are allowed an additional $1,000 contribution for "catch-up."
In 2026, those contribution limits increased to $4,400 for individuals and $8,750 for families. Individuals age 55 and older are still allowed an additional $1,000 contribution to "catch up."
FAQ: Frequently Asked Questions About Health Savings Accounts (HSA)
Health Savings Accounts aren’t always straightforward. In this section, we’ll cover some of the most common questions about HSAs.
Health Savings Accounts (HSA) vs. Flexible Savings Accounts (FSA)
Some people confuse a Health Savings Account (HSA) with a Flexible Spending Account (FSA), but these two accounts work very differently.
A Flexible Savings Account (FSA) allows you to contribute pre-tax money to use on eligible health expenses like prescriptions, over-the-counter medications, and other medical costs.
However, you must use FSA money within the calendar year. An FSA is a use-it-or-lose-it benefit.
HSAs on the other hand, never expire. You can keep your HSA regardless of your employment status or age. The money within your HSA can continue to grow and be used for future health expenses throughout your life.
How to Open a Health Savings Account (HSA)
To open a Health Savings Account, you'll first need to be enrolled in a qualified High-Deductible Health Plan (HDHP) (more on that in the next section).
In addition to being enrolled in an HDHP, you can't be covered by another type of health insurance, such as Medicare or a traditional non-HDHP health insurance plan.
The easiest way to enroll in an HSA is to set it up through your employer during open enrollment. Look for an HDHP plan with an HSA option. If that's not an option, consider opening an HSA with a bank, credit union, or online HSA providers.
What Is a High-Deductible Health Plan (HDHP)?
A High-Deductible Health Plan (HDHP) is a type of health insurance plan with lower monthly premiums and higher out-of-pocket costs or deductibles. A deductible is how much you can expect to pay out-of-pocket before your insurance coverage kicks in.
HDHPs can be beneficial for those who pair them with HSAs because they allow you to save on taxes and premiums, while using money from your HSA to take care of any deductibles.
Qualified HSA Expenses: What You Can Use Your HSA For
You can use the money within your HSA to pay for any qualified medical expenses. When you use it for a qualified expense, your money comes out tax-free. Money used for non-qualified expenses is subject to taxation.
The IRS defines "qualified medical expenses" broadly, including some costs that insurance plans may not cover. Common qualified expenses include (but are not limited to):
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Acupuncture
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Alcoholism treatment
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Ambulance services
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Chiropractors
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Contact lens supplies
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Dental treatments
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Diagnostic services
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Doctor's fees
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Eye exams, glasses, and surgery
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Fertility services
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Guide dogs
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Hearing aids and batteries
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Hospital services
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Insulin
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Lab Fees
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Long-Term Care Insurance premiums
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Prescription medications
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Nursing services
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Surgery
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Psychiatric care
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Telephone equipment for the visually or hearing impaired
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Therapy or counseling
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Wheelchairs
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X-rays
Long-Term Care Insurance Can Protect Your Retirement Plan
Planning for retirement doesn't end with a savings account. In addition to an HSA, it's essential to plan for future care needs with Long-Term Care Insurance.
A majority of people will need long-term care services at some point in their life, and the biggest surprise and hurdle for most people is learning that traditional health insurance and Medicare do not cover long-term care needs. In addition, long-term care costs are high and increase more each year, making it difficult to rely on savings alone to cover your needs.
Long-Term Care Insurance safeguards your savings from the high costs of care. Once you get a policy, premiums are expected to remain stable throughout the duration of your coverage, creating a more predictable cost of care.
LTC Insurance covers all custodial care needs including room and board at an assisted living facility or a nursing home. LTC Insurance also covers home care services, adult day care, and more.
Combining a Health Savings Account with Long-Term Care Insurance is a fool-proof way to protect your income, assets, and retirement plans. Not only can you use HSA money to help cover LTC Insurance premiums, but if you ever used all the money within your policy, your HSA could help pay for some of the care expenses.
In addition, there is a specific type of LTC Insurance plan that helps further safeguard assets and income. A partnership Long-Term Care Insurance policy is a special type of plan that allows you to qualify for Medicaid without worrying about spend-downs or estate recovery if you ever use all the money within your plan.
The best time to get Long-Term Care Insurance is before you need care. Many people apply for policies in their 40s and 50s, although there are options available for those in their 60s and 70s as well, as long as you don't already need care.
Turning Your HSA Into a Long-Term Care Safety Net
A Health Savings Account can be more than just a savings tool; your HSA can help you create a long-term care safety net.
When you use your HSA to pay for Long-Term Care Insurance premiums, you're using pre-tax dollars to fund future protection. This means you're reducing your taxable income by contributing to your HSA and avoiding taxes down the line by using HSA money to cover premiums.
In addition to being a great way to save for long-term care costs, your HSA is also flexible. You can keep your HSA for life and use the money within your account for any qualified medical expense including Medicare, insurance deductibles, or unexpected health care costs that may arise later in life.
LTC News is here to help. If you're currently looking for care you can use our Care Directory to find a high-quality provider close to home. LTC News also has several educational resources on Long-Term Care Insurance, retirement planning, and long-term care costs:
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What Are Long-Term Care Insurance Tax Deductions? (2026) – Learn more about what tax deductions and tax savings you can qualify for with a Long-Term Care Insurance policy.
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What Are the Consequences of Not Planning for Long-Term Care? – Not planning for long-term care costs can be a grave mistake. In this article, we explore what to expect if you leave long-term care costs up in the air and how to get a plan together quickly.
