Healthcare affordability was part of the midterm election cost-of-living debate.
It remains to be seen how a new Congress might try to address that pain point. Now, as workers choose their 2027 health insurance coverage, millions face a more immediate decision: whether to pick a plan that lets them contribute to a health savings account, or HSA.
The question is whether an HSA-eligible plan with lower premiums and tax benefits is worth the higher deductible and potential out-of-pocket costs.
HSAs come with a 'triple tax advantage'
One noted advantage of an HSA is its tax benefits.
"You have a triple tax advantage," said Kalei Cadinha-Pua'a, vice chair and CEO of Honolulu-based Cadinha & Co., which ranked No. 21 on this year's CNBC Financial Advisor 100 list.
Employer and employee contributions go into the fund before taxes; earnings in the account aren't taxed while they remain in the HSA; and withdrawals for qualified medical expenses are tax-free.
Plus, financial advisors say employees often overlook another potential tax savings. HSA contributions made through an employer's Section 125 cafeteria plan generally aren't subject to Social Security and Medicare taxes.
That can make payroll contributions more tax-efficient than contributing on your own and claiming a deduction later, said certified financial planner and enrolled agent Andy Panko, the founder of Tenon Financial in Metuchen, New Jersey.
Workers should check how their employer processes contributions and ask if they receive the Social Security and Medicare tax break on HSA contributions.
A worker who chooses to contribute to an HSA outside of payroll may be able to deduct eligible contributions on their federal tax return but generally won't get the break on Social Security and Medicare taxes.
High-deductible health plans aren't for everyone
HSAs are typically paired with a high-deductible health plan. Consumers generally have to be enrolled in a high-deductible health plan in order to contribute to the HSA.
Such a plan may have lower premiums relative to others available to consumers, but workers can face higher costs on the back end when they need care.
For 2027, the IRS says an HSA-eligible plan must generally have a deductible of at least $1,750 for individual coverage or $3,500 for family coverage. The plan's annual out-of-pocket expenses, excluding premiums, cannot exceed $8,700 for individual coverage or $17,400 for family coverage.
More employers are offering health plans with an HSA option. Across all U.S. health plan sponsors with at least 50 employees, 63% offer a high-deductible plan that qualifies for an HSA, according to a recent Marsh employer survey. More than a third, 37%, of all employees covered by an employer health plan are enrolled in an HSA-eligible plan.
"Employers often offer an HSA plan as a low-cost option, and then because of the higher deductible and the overall cost-sharing structure, these plans are typically costing less for the employer as well as the employee," said Frank Easley, senior vice president of Aon Health Solutions.
An HSA's tax advantages don't by themselves make an HSA-eligible plan the right choice. Workers should consider how the plan's premiums, deductible and out-of-pocket maximum align with expected healthcare needs before enrolling, financial advisors say.
They should also factor in any employer HSA contributions and the cash they have available to pay an unexpected medical bill before they reach their deductible, says Nathan Lochstampfor, CFP, an associate consultant at Harrisburg, Pennsylvania-based Conrad Siegel Investment Advisors, which is ranked No. 45 on CNBC's Financial Advisor 100 for 2026.
If consumers can't afford to pay the deductible of a high-deductible health plan, it may make sense to choose a plan with higher premiums and lower out-of-pocket costs if they need care, he said.
Lochstampfor recommends clients ask themselves: "If I got in a car accident going home today from work, could I afford that deductible? Or would I be better off maybe paying a little bit of higher premiums until I build up those cash reserves?"
Save and invest to maximize an HSA
HSA contribution limits for 2027 are $4,500 for individuals and $9,000 for families. People age 55 and older can make a $1,000 catch-up contribution.
You can use an HSA to pay for qualified medical expenses now or later. Any money left in the account generally carries over from year to year, and earnings aren't taxed while they remain in the account. HSA balances can also be invested. As of midyear, 11% of HSA accounts held invested assets, according to Devenir, an HSA investment firm.
Ideally, financial advisors say, you keep some of the balance in cash to cover short-term needs and invest the rest for retirement.
"If you have a long time and you can begin to develop a strategy for savings, it can really work and benefit you in the future when you don't have that earned income to pay for your healthcare needs," Cadinha-Pua'a said.
Some HSA owners pay current medical expenses out of pocket and leave money invested in the account so it can grow tax-free. They can use their HSA funds to reimburse themselves years later for those out-of-pocket expenses. Some conditions apply: It must be a qualified medical expense and incurred after the HSA was established, for example.
That strategy can be smart — but it requires good records.
The IRS wants to make sure expenses aren't double counted. Account holders need to keep records showing that any HSA distributions paid or reimbursed qualified medical expenses weren't also claimed as an itemized deduction.
"Be really honest with yourself," Cadinha-Pua'a said. "Are you a good record keeper?"
She recommends making digital copies of receipts, bills and proof of payment, organizing them in an electronic folder and backing up that folder to the cloud. That can help preserve the documentation if a computer fails or the account holder needs to substantiate a reimbursement years later.
