Open enrollment is your annual opportunity to review and select the benefits that best fit your health and financial needs. Beyond medical insurance, you’ll choose dental and vision coverage, life and disability insurance, tax-advantaged accounts (dependent care, commuter benefits), and retirement savings plans.

One area that often causes confusion is deciding between traditional medical plans and High Deductible Health Plans (HDHPs), along with their powerful partner: the Health Savings Account (HSA). Understanding how these work together can help you make smarter choices for 2026 and beyond.

Choosing the Right Medical Plan

Selecting a medical plan comes down to two basics:

• Provider comfort: Make sure you’re satisfied with the in-network doctors and hospitals.

• Cost expectations: Review your historical annual medical expenses and consider whether you anticipate major changes.

If your expenses are generally low and predictable, an HDHP paired with an HSA can be especially attractive.

Why Consider a High Deductible Health Plan (HDHP)?

Lower premiums, higher deductibles: HDHPs typically have lower monthly premiums, but you’ll pay out-of-pocket until you reach your deductible.

Potential cost savings: For healthy individuals and families who don’t expect large medical bills, the premium savings plus HSA advantages often outweigh the higher deductible.

HSA eligibility: You can only contribute to an HSA if you are enrolled in an HDHP. This makes the plan an entry point to one of the most tax-efficient tools available.

Health Savings Accounts (HSA): Triple Tax Advantage

In 2026, contribution limits have increased:

• Individual: $4,400

• Family: $8,750

• Catch-up (age 55+): $1,000

Why do HSAs stand out? Three reasons: contributions being federal, state, and FICA tax-free; withdrawals for qualified healthcare expenses are tax-free; and balances can be invested for tax-free growth. No other account offers this “triple tax advantage.”

Don’t Miss the Free Money

Shockingly, more than half of eligible employees don’t open or fund an HSA. That’s surprising because many employers contribute $500–$2,000 per year to jump-start employee accounts. Contributing even $1 per pay period can unlock hundreds or thousands in employer dollars.

Some companies reward healthy habits: for example, $400 added to your HSA when you and your spouse complete annual physicals. Skipping this is like leaving free money on the table.

Real-World Tax Savings

Consider a family in the 24% federal tax bracket who spends around $4,000 annually on out-of-pocket medical expenses. By funding those expenses through an HSA, they save about $1,480 in taxes (federal, state of MA, and FICA combined).

Families in higher brackets gain even more. A household in the 32% bracket contributing the 2026 family maximum could save nearly $3,900 in taxes.

HSAs as a Retirement Strategy

HSAs aren’t just about today’s medical bills—they can be a powerful long-term planning tool. Some families pay current medical expenses out of pocket and allow HSA funds to stay invested. Over time, this can compound into a substantial tax-free pool of money.

In retirement, HSA dollars can cover Medicare premiums, dental, vision, hearing aids, nursing services, and long-term care insurance. For early retirees, HSAs can even pay COBRA premiums to bridge coverage until Medicare eligibility.

The Bottom Line

Open enrollment is one of the most important financial planning windows of the year. If you’re eligible for an HDHP and HSA, weigh the trade-offs carefully, run the numbers, and don’t overlook the employer contributions and long-term tax savings.

Learn more by connecting with your benefits coordinator or Certified Financial Planner.

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.

Glenn Brown is a Holliston resident and owner of PlanDynamic, LLC, www.PlanDynamic.com. Glenn is a fee-only Certified Financial Planner™ helping motivated people take control of their planning and investing, so they can balance kids, aging parents and financial independence.

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