What is an HSA, and why do people call it the best account in the tax code?

A Health Savings Account, available only alongside a high-deductible health plan, is the single most tax-advantaged account Congress has ever written: contributions are deductible, growth is untaxed, and withdrawals for qualified medical expenses are untaxed too. Every other account gives you two of the three; the HSA gives all of them, plus contribution limits that adjust annually and, through many employers, payroll contributions that also skip Social Security and Medicare tax.

The power move most holders miss: the money never expires, unlike an FSA, and the account is investable. Pay routine medical costs out of pocket if you can, let the HSA compound in index funds for decades, and it becomes a medical retirement fund, with a bonus: after 65, non-medical withdrawals are simply taxed like a traditional IRA, no penalty. Keep receipts, since qualified expenses can be reimbursed years later, tax-free. The prerequisite question is whether a high-deductible plan actually suits your health usage; the tax perks should not talk a heavy healthcare user into the wrong insurance.