An argument for contributing less than the max…

If contributing the max isn't right for your budget, consider contributing at least as much to your HSA as the amount of your insurance deductible. This way, you know you'll be able to cover your medical expenses for the year before your coinsurance kicks in, and you'll be paying for those expenses with tax-free dollars.

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You should also contribute less than the maximum if…

there's a strong chance you will need the money for something that isn't a qualified medical expense. In this case, put that money in a standard savings account, rather than an HSA.

If you don't, and you have to withdraw the money from your HSA to pay for, say, car repairs, you'll pay a penalty of 20%. And if you made the contribution with tax-free dollars, you'll also be required to pay income tax on the amount you withdrew to use for a non-qualified reason.

That seems like a lot to pay for your own money, so plan wisely!

However, once you reach the age of 65 (Medicare eligibility)…

the 20% tax penalty will disappear and you can withdraw your HSA funds to be used on anything, they will just be taxed as regular income.