Check the background of this investment professional on FINRA's BrokerCheck

HSA Image on Health Savings Account Rules blog post at

Nurses are intimately aware of the cost of healthcare. Every day, nurses deliver care in a cost-effective manner. And while being a good steward for your employer is important, so is managing your personal costs. In this article, you will explore Health Savings Accounts. Specifically, you will uncover Health Savings Account rules to help you decide if this plan aligns with your financial goals.

Health Savings Account Basics

Before we get into the rules, let’s define Health Savings Account basics. A Health Savings Account is a tax-advantaged account designed for individuals with high deductible health plans (HDHPs). It serves as a financial vessel, allowing you to set aside pre-tax dollars to cover qualified medical expenses.

Health Savings Accounts are qualified plans under the Internal Revenue Service (IRS) to help pay for healthcare. These qualified plans have unique tax advantages.  And a Health Savings Account works with your insurance policy by helping to cover costs like co-pays, prescriptions, and other qualified expenses.  But besides the advantages, there are specific Health Savings Account rules to follow.   And understanding the rules is important to avoid tax penalties.  Let’s dig deeper into the rules.

Health Savings Account RulesRules Image on Health Savings Account Rules blog post at

Rule 1: Eligibility

Not everyone is eligible for a Health Savings Account.  To qualify, you must be

  • Enrolled in a High Deductible Health Plan
  • Not covered by another health plan, including Medicare and
  • Not claimed as a dependent on someone else’s tax return

Rule 2: Contribution Limits

Contributions to your Health Savings Account come with limits.  For 2024, an individual can contribute up to $4150, while a family can contribute up to $8300.  Being mindful of these limits helps to ensure you make the most of the tax advantages without hitting any financial roadblocks.

Rule 3: Qualified Medical Expenses

The primary purpose of a Health Savings Account is to cover medical expenses.  But not all medical expenses qualify.  From prescription medications to preventive care, understanding what qualifies can save you from potential pitfalls. Consider speaking with a Financial Advisor or review IRS Publication 502 to learn of covered and excluded expenses.

Rule 4: Tax Advantages

The most appealing feature of the Health Savings Account rules is the tax benefits they offer. Contributions are tax-deductible, the interest earned is tax-free, and withdrawals for qualified medical expenses are also tax-exempt. This trifecta of tax advantages makes Health Savings Accounts powerful tools for savvy financial planning.

Rule 5: Rollover Magic

Unlike some other accounts, Health Savings Accounts come with the unique feature of the ability to roll over funds from year to year. Any unspent funds remain in your account, continuing to grow tax-free. This feature provides protection for unforeseen medical expenses and allows your Health Savings Account to grow.  And the funds are portable.  Meaning you can transfer your funds to another Health Savings Account at your new job.

Withdrawal Rules

Health Savings Accounts have specific withdrawal rules.  While qualified expenses are allowed, there are penalties for withdrawals of nonqualified expenses.  For most, the penalty is a 20% income tax on the amount withdrawn.  However, those over 65 and disabled are not subject to the penalty.

Age 65 and Medicare Rules

When you turn 65, you can withdraw funds for any reason without penalties.  However, if you are on Medicare, you can no longer contribute to your Health Savings Account.  If you continue to work after 65 and are covered by your employer health plan, you can continue to contribute to your Health Savings Account.


Health Savings Account Image on Health Savings Account Rules blog post at www.drgeorgenecollins.comIn conclusion, Health Savings Accounts can be a good fit for nurses to help pay for qualified healthcare costs.  Understanding Health Savings Account rules can help you optimize the benefits of this financial tool.  Knowing the rules can also help you avoid penalties.  Consider speaking with a Financial Advisor to find out if a Health Savings Account aligns with your financial goals.


Want to learn if you are ready for retirement?  Take the Retirement Readiness Assessment.

Ready to take control of your finances?  Contact me.


These concepts were derived under current laws and regulations. Changes in the law or regulations may affect the information provided. Upon clicking these links, the content you are going to is not controlled, reviewed or approved by, and is not the responsibility of, the website that you are leaving.

Categories: Financial Literacy

Georgene Collins

Georgene Collins, RICP®, RN, PhD, MBA is a registered nurse turned Financial Advisor at Airey Financial Group. Georgene helps other nurses take control of their finances and prepare for retirement. Georgene began her career with Airey Financial Group in 2017 after retiring from 30 years in healthcare. Georgene holds the Retirement Income Certified Professional (RICP®) designation from The American College of Financial Services. She holds health and life insurance licenses and a long-term care certificate in Indiana and Illinois. Georgene is a Registered Representative and Investment Advisor Representative and has earned the FINRA Series 63 and 65 registrations.