The Triple Tax Advantage: HSAs as a Complement to Retirement Accounts

A Health Savings Account (HSA) can serve as a powerful complement to retirement accounts like SEP‑IRAs and Solo 401(k)s, especially for self‑employed therapists who want both tax advantages and flexibility in managing healthcare costs.

For therapists in private practice, financial planning often feels like juggling multiple priorities: saving for retirement, managing taxes, and covering healthcare expenses. While SEP‑IRAs and Solo 401(k)s are excellent for long‑term retirement savings, there’s another option that deserves attention — the Health Savings Account (HSA). When paired with a high‑deductible health plan (HDHP), an HSA offers unique tax benefits and can double as a stealth retirement account.

What is an HSA?

An HSA is a tax‑advantaged account that allows you to set aside pre‑tax dollars to pay for qualified medical expenses. To be eligible, you must be enrolled in a qualified HDHP. For 2025, the IRS defines an HDHP as having a minimum deductible of $1,650 for individuals and $3,300 for families, with maximum out‑of‑pocket limits of $8,300 and $16,600 respectively.

Contribution Limits

Self‑employed therapists can contribute up to $4,300 for individual coverage or $8,550 for family coverage in 2025. If you’re 55 or older, you can add an extra $1,000 as a catch‑up contribution. Unlike flexible spending accounts (FSAs), HSAs are not “use‑it‑or‑lose‑it” — funds roll over year after year.

Triple Tax Advantage

HSAs are often called the “triple tax win” because:

• Contributions are tax‑deductible, lowering your taxable income.

• Growth is tax‑free — investments inside the HSA can compound without tax drag.

• Withdrawals are tax‑free when used for qualified medical expenses.

This combination makes HSAs one of the most tax‑efficient accounts available.

HSAs as Retirement Tools

While HSAs are designed for healthcare, they can also serve as supplemental retirement accounts:

• After age 65, you can withdraw funds for any purpose (not just medical) without penalty, though non‑medical withdrawals are taxed like ordinary income.

• If used for medical expenses, withdrawals remain tax‑free — a huge advantage given healthcare costs in retirement.

• Investing HSA funds in mutual funds or ETFs allows long‑term growth, similar to an IRA or 401(k).

Why HSAs Complement SEP‑IRAs and Solo 401(k)s

• Flexibility: HSAs cover immediate healthcare costs while retirement accounts focus on long‑term savings.

• Diversification: Adds another tax‑advantaged bucket alongside SEP‑IRA or Solo 401(k).

• Healthcare hedge: Anticipates one of the largest expenses in retirement — medical care.

Final Thoughts

For self‑employed therapists, combining a Solo 401(k) or SEP‑IRA with an HSA creates a balanced strategy: retirement savings for the future, and healthcare savings for both now and later. By leveraging the HSA’s triple tax advantage, you not only reduce today’s tax bill but also build a reserve for one of retirement’s biggest costs.

In short: an HSA isn’t just about healthcare — it’s a stealth retirement account that complements your existing savings plan.