The average American family spends over $6,000 per year on out-of-pocket healthcare costs, according to KFF Health System Tracker. For many Missouri households, that number arrives without warning. A health savings account, or HSA, is one of the most effective tools available for managing those costs while building real tax savings at the same time.
This guide explains what a health savings account is, how it works, who qualifies, what you can spend it on, and how it compares to a flexible spending account. If you have a high-deductible health plan and have not yet opened an HSA, you may be leaving meaningful tax benefits on the table.
A health savings account is a tax-advantaged deposit account designed to help people with high-deductible health plans (HDHPs) save for qualified medical expenses. You contribute pre-tax dollars, the funds grow tax-free, and withdrawals are tax-free as long as you use them for eligible healthcare costs.
HSAs are often described as having a triple tax advantage: your contributions reduce your taxable income, any interest or investment growth in the account is not taxed, and money spent on qualified medical expenses comes out tax-free. No other common savings vehicle offers all three benefits simultaneously.
The account belongs to you, not your employer or insurer. That means it goes with you if you change jobs, switch health plans, or move to a different state. For Missouri residents looking for a straightforward way to manage healthcare costs, a health savings account in Missouri works the same as anywhere else in the country; federal rules govern HSAs uniformly.
Opening an HSA is straightforward. You choose an HSA-eligible bank or financial institution, make an opening deposit, and begin contributing. At FSCB, the Health Savings Account requires just $50 to open, making it one of the most accessible options available.
Once your account is open, you can contribute funds throughout the year up to the IRS annual limit. Contributions can come from you directly, through payroll deductions, or from your employer. All contributions from every source count toward the same annual cap.
When a qualified medical expense comes up, you withdraw from the account to pay for it. Many HSA accounts come with a debit card for direct payment. Any funds you do not spend stay in the account, earn interest, and carry over to the next year. There is no deadline to use the money.
To contribute to an HSA, you must meet all of the following criteria:
If you are unsure whether your health plan qualifies, check with your HR department or health insurance provider. You can also ask an FSCB banker, and we will help you determine your next steps.
The IRS defines qualified medical expenses broadly. Your HSA funds can cover a wide range of costs that standard health insurance may not fully address:
For a full list, IRS Publication 502 outlines all eligible medical and dental expenses. Using HSA funds for non-qualified expenses before age 65 results in income tax plus a 20% penalty. After age 65, you can withdraw for any purpose, though non-medical withdrawals are subject to ordinary income tax.
Both accounts help you pay for medical expenses with pre-tax dollars, but there are important differences:
For people with HDHPs who can plan ahead, an HSA is generally the stronger long-term tool. The ability to carry a growing balance forward, year after year, turns your HSA into a dedicated healthcare reserve that keeps compounding over time.
The tax advantages of an HSA are hard to match. Here is how each of the three benefits works:
Contributions reduce your taxable income. If you contribute $4,400 to your HSA in 2026 and you are in the 22% federal tax bracket, you could reduce your federal tax bill by roughly $968. Contributions made through payroll deductions also avoid FICA taxes, saving an additional 7.65%.
Earnings grow tax-free. Any interest your HSA balance earns is not subject to federal income tax, regardless of how long it accumulates. This makes an HSA a useful long-term savings vehicle for future healthcare costs.
Withdrawals for qualified expenses are tax-free. When you pay for a qualified medical, dental, or vision expense with HSA funds, that withdrawal does not count as income. You pay nothing extra in taxes on money spent for eligible healthcare.
According to Fidelity, a single 65-year-old retiring in 2024 could expect to spend an average of $165,000 on healthcare through retirement. An HSA, built up steadily over working years, is one of the most tax-efficient ways to prepare for those costs.
FSCB offers a Health Savings Account with a $50 opening deposit, making it easy to get started without a large upfront commitment. The account earns interest on your balance and funds roll over from year to year with no expiration.
To keep your account fee-free, maintain an average daily ledger balance of $1,000 or more to avoid the $2.00 monthly service charge, and enroll in electronic statements to avoid the $3.00 monthly paper statement fee.
The account also includes Mastercard ID Theft Protection and Money Management tools to help you track your spending and stay on top of your financial habits. Stop by any FSCB branch to open your account. Bring a valid government-issued ID and your Social Security number.
If you have a high-deductible health plan and have not yet opened an HSA, the next open enrollment period or a qualifying life event is the right time to start. The earlier you open the account, the more time your balance has to grow.
Learn more about FSCB's Health Savings Account or find your nearest Missouri branch to open one today.
Yes, but the tax consequences depend on your age. Before age 65, using HSA funds for non-qualified expenses triggers ordinary income tax plus a 20% penalty. After age 65, you can withdraw for any reason and only pay ordinary income tax, with no penalty. The account effectively becomes similar to a traditional IRA for non-medical spending once you reach Medicare age.
Your HSA stays with you. Because the account belongs to you personally and not to your employer, you keep it regardless of where you work or what health plan you carry. If you switch to a non-HDHP plan, you can no longer make new contributions, but you can continue to use the existing balance for qualified expenses.
Yes. Any unused HSA balance carries over to the next year automatically with no limit. FSCB's Health Savings Account is not a use-it-or-lose-it account. Funds accumulate as long as the account is open, which makes an HSA a practical long-term savings tool for future healthcare needs.
Yes. IRS rules allow you to use HSA funds for qualified medical expenses incurred by you, your spouse, and any dependents you claim on your federal tax return. Your spouse and dependents do not need to be covered by your HDHP for you to use HSA funds on their behalf.
According to IRS Revenue Procedure 2025-19, the 2026 HSA contribution limits are $4,400 for self-only HDHP coverage and $8,750 for family coverage. Individuals age 55 or older who are not yet enrolled in Medicare may contribute an additional $1,000 as a catch-up contribution. These limits include all contributions from all sources, including any amounts your employer contributes on your behalf.