If you are 55 or older you can put an extra $1,000 into your HSA every year. This tool shows what those catch-up dollars could grow to by age 65 if you invest them.
Sample input: Your current age (55-64): 55, Expected annual return (%): 7
Extra HSA from catch-ups: 13816 (Catch-up clearly pays off)
Adding the $1,000-per-year HSA catch-up from age 55 to 65 (10 years) and investing it could be worth about $13,816 at 65 — roughly $10,000 contributed plus $3,816 of tax-free growth.
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Account holders age 55 or older who are not enrolled in Medicare can add an extra $1,000 per year on top of the regular limit, per IRS Publication 969. Each spouse 55+ needs their own HSA to use their own catch-up.
It compounds $1,000 of catch-up contributions each year from your current age to 65 at your expected return, using the standard future-value-of-an-annuity formula. The growth is tax-free inside the HSA.
Even one or two catch-up years adds tax-free money you can withdraw for medical costs at any age. The earlier you start, the more compounding works in your favor, but it is rarely a bad idea if you can afford it.
It is treated like the rest of your HSA: tax-free for qualified medical expenses at any age, and after 65 withdrawable for any purpose at ordinary income tax with no penalty (IRS Publication 969).