HSA for Long-Term Care and Senior Care: How It Works

A Health Savings Account (HSA) lets you pay for long-term and senior care with tax-free money. An HSA for long-term care covers qualified care services, premiums on a qualified long-term care insurance contract up to an age-based cap, and, once you're 65 or older, Medicare premiums other than Medigap. Only an eligible individual can contribute, though, and for 2026 the law widened who that is.1

This guide covers what an HSA is, the 2026 contribution limits, exactly what it pays for in senior care and for whom, the rules that change at 65, and where it falls short.

What an HSA Is, and Who Can Have One

An HSA is a personal savings account for health costs. You can deduct what you put in, up to the annual limit. Earnings aren't included in your income while they stay in the account. And the money comes out tax-free when you spend it on qualified medical expenses.1

But there's a gate. Only an eligible individual can contribute. IRS Publication 969 (2025 edition) lists the requirements: you're covered under a high-deductible health plan (HDHP) on the first day of the month, you have no other health coverage except what the HSA rules permit, you aren't enrolled in Medicare, and nobody can claim you as a dependent on their tax return.1

Pub. L. 119-21 widened that test for months beginning after December 31, 2025, in two ways.

• Bronze and catastrophic plans now count. The law treats bronze and catastrophic plans available as individual coverage through an Exchange as HDHPs. The IRS describes them as HSA-compatible as of Jan. 1, 2026, whether or not they meet the general definition of an HDHP. It says Notice 2026-05 clarifies they don't have to be bought through an Exchange to qualify.1
• Certain direct primary care arrangements no longer block you. A direct primary care service arrangement isn't treated as a health plan for the no-other-coverage test. That covers only certain arrangements. None counts if your total fees for all such arrangements for the month exceed $150, or twice that amount if you have an arrangement that covers more than one individual.1

So a traditional high-deductible plan is no longer the only way in.1 The IRS summarizes both changes in its guidance announcement.

Contributing and spending are separate tests. Tax-free distributions are for qualified medical expenses you incur after you establish the HSA, so the account has to exist before the bill does.1

Money you don't spend stays put. Amounts left at the end of the year are generally carried over to the next year, and earnings aren't included in your income while they're held in the HSA.1

The 2026 Contribution Limits

These are the IRS limits for calendar year 2026.

• Self-only coverage: $4,400.
• Family coverage: $8,750.
• Catch-up, age 55 or older at the end of the tax year: an extra $1,000, on top of either limit.1

The two limits come from IRS Rev. Proc. 2025-19.

What Can You Pay For With an HSA for Long-Term Care?

An HSA pays for qualified medical expenses, and only to the extent insurance or another source hasn't already covered them.1

Qualified long-term care services. Diagnostic, therapeutic, and maintenance or personal-care services count as medical care when two things are true. A chronically ill person requires them. And they're provided under a plan of care prescribed by a licensed health care practitioner.1 The test, as IRS Publication 502 states it, is about who needs the care and how it's prescribed.

Who counts as chronically ill. A licensed health care practitioner has to have certified, within the previous 12 months, that the person meets one of two descriptions.1

• Daily activities. The person can't perform at least two activities of daily living without substantial assistance from another person for at least 90 days, due to a loss of functional capacity. The activities are eating, toileting, transferring, bathing, dressing, and continence.
• Cognitive impairment. The person requires substantial supervision to be protected from threats to health and safety due to severe cognitive impairment.1

An attendant or visiting nurse. The HSA test is whether a cost is medical care as the tax code defines it in section 213(d).1 For the medical expense deduction, IRS Publication 502 counts wages and other amounts you pay for nursing services as medical expenses. The services don't have to be performed by a nurse, as long as they're of a kind generally performed by a nurse.2

Generally, only the amount spent for nursing services counts. If the attendant also does personal and household work, the pay has to be divided between the time spent on household and personal services and the time spent on nursing services. The IRS's own example is a visiting nurse paid $300 per week for medical and household services who spends ten percent of the time on household services. Only $270 per week counts. The $30 for household services doesn't.2 Two things soften that split. Certain maintenance or personal care services provided for qualified long-term care can still count. So can part of what you pay for the attendant's meals, plus any extra rent or utilities you pay for household upkeep because of the attendant.2

Publication 502 states those rules for the deduction. This guide's IRS sources don't say outright that an HSA follows the same list, so confirm with a tax professional before you pay an attendant from the account.

Long-term care insurance premiums. HSA money generally can't pay for insurance, but long-term care insurance is a listed exception. The policy has to be a qualified long-term care insurance contract, which the tax code defines in section 7702B(b), and the premiums count only up to an age-based limit that's adjusted every year.1 The older you are, the more you can pull tax-free. For 2026 the caps are:

These caps come from IRS Rev. Proc. 2025-32.1 If your premium runs higher than your age cap, the extra doesn't come out tax-free.

Worked example #1 shows how the age band works. The figures below are hypothetical and shown only to illustrate how the calculation works. They are not a real case and not a prediction of your own result.

Say a 68-year-old holds a qualified long-term care insurance contract with a $5,500 annual premium. For 2026 the 61-to-70 age band caps HSA-paid premiums at $4,960.1 So $4,960 of the premium can come out of the HSA tax-free, and the remaining $540 gets paid with other money. A 58-year-old with the same premium would sit in the 51-to-60 band, where the 2026 cap is $1,860.1

A few other premiums and fees. Besides long-term care insurance, Publication 969 (2025 edition) lists three more premium exceptions. The 2026 law adds direct primary care fees.1

• Continuation coverage. Health care continuation coverage such as COBRA.
• Coverage while you're unemployed. Health coverage while you're receiving unemployment compensation under federal or state law.
• Medicare at 65 or older. Medicare and other health coverage if you're 65 or older, other than a Medicare supplemental policy such as Medigap.
• Direct primary care fees. For months beginning after December 31, 2025, the law adds direct primary care service arrangements. The IRS says someone enrolled in certain direct primary care arrangements may use HSA funds tax-free to pay the periodic fees. Only an arrangement that passes the $150 monthly fee test described under Who Can Have One counts. That $150 is a test for the arrangement, not an amount the HSA will pay.1

The continuation and unemployment exceptions can be for your spouse or a dependent who meets the requirement for that type of coverage.1

Nursing home care, and where assisted living fits. This is the one families get wrong. The cost of medical care in a nursing home, home for the aged, or similar institution is a qualified expense. What happens to meals and lodging depends on why the person is there.1

• A principal reason for being there is to get medical care. Meals and lodging in the home count, along with the medical care.
• The reason for being in the home is personal. Meals and lodging don't count. The part of the cost that is for medical or nursing care still does.1

That rule is written for a nursing home, home for the aged, or similar institution. This guide's IRS sources don't settle whether a particular assisted-living residence counts as one. Read the rule in IRS Publication 502 and ask a tax professional before you treat room and board there as qualified.

One part doesn't wait on that answer. Long-term care services a chronically ill resident receives under a plan of care prescribed by a licensed health care practitioner, personal care included, are qualified long-term care services.1

Qualified medical expenses are amounts paid for medical care as the tax code defines it in section 213(d).1 When a bill is borderline, check it against IRS Publication 969, the IRS guide to HSAs, or ask a tax professional.

Before you pay a care bill from the HSA, check three things.

1. The plan of care. For long-term care services, a licensed health care practitioner has to prescribe the plan of care, and the person has to be certified as chronically ill within the previous 12 months. Both come from a licensed health care practitioner, so ask the one treating the person for the certification and the plan of care before you pay.
2. The timing and the payer. Pay only expenses incurred after you established the HSA, and only the part insurance or another source didn't cover.
3. The age cap. Before you pay a long-term care insurance premium, check the limit for your age band that year.1

After you pay, report it. Under IRS Publication 969 (2025 edition), your HSA trustee reports any distribution to you and the IRS on Form 1099-SA. A distribution you use for qualified medical expenses isn't taxed, but you have to report it on Form 8889. One exception: a distribution of an excess contribution taken out after your return's due date, including extensions, is taxed even if it paid qualified medical expenses. A distribution you don't use for qualified medical expenses is taxed, and you report the amount on Form 8889. You must file Form 8889 with your Form 1040, 1040-SR, or 1040-NR if you, or your spouse if you're married filing jointly, had any activity in your HSA during the year.1

Keep the records. You must keep records sufficient to show that the distributions were exclusively to pay or reimburse qualified medical expenses, that those expenses hadn't been previously paid or reimbursed from another source, and that they hadn't been taken as an itemized deduction in any year. Keep them with your tax records. Don't send them with your return.1

Can an Adult Child's HSA Pay for a Parent's Care?

Sometimes. The expenses an HSA pays don't have to be your own. Qualified medical expenses include those of three groups.1

• You and your spouse.
• The dependents you claim on your tax return.
• Anyone you could have claimed as a dependent except for one of three reasons: the person filed a joint return, the person had gross income equal to or more than the exemption amount, or you (or your spouse, if you file jointly) could be claimed as a dependent on someone else's return.1

So your HSA can pay a parent's qualified medical expenses only when the parent is your dependent, or would be except for one of those three reasons.1

What makes a parent your dependent. To claim a parent as a qualifying relative, the parent's gross income for the year has to be less than the exemption amount, which is $5,300 for 2026. You also have to provide over half of their support. That isn't the only route. Where two or more people who each could otherwise claim the parent together provide over half the support, they may agree that one of them claims the parent under a multiple support agreement. It can be any one who individually provides more than 10% of the support, and the others sign statements agreeing not to claim the parent.2 Gross income for this test includes only the taxable portion of Social Security benefits, so Social Security that isn't taxable doesn't count against the limit.2

Those aren't the only tests. Even with a qualifying relative, you can claim the person only if three further tests are met: the dependent taxpayer test, the joint return test, and the citizen or resident test.2 The full rules are in IRS Publication 501.

Why the gross-income exception matters. A parent with gross income of $5,300 or more in 2026 can't be claimed as your dependent.2 For HSA purposes, that parent can still be someone you could have claimed except for gross income. If gross income is the only thing preventing you from claiming them, your HSA can pay their qualified medical expenses.1

The other HSA tests don't relax because the bill is a parent's. The expense has to be a qualified medical expense, incurred after you established the HSA, and not already covered by insurance or another source.1

What Changes at 65

Turning 65 reshapes how an HSA works. Three things shift.

Medicare premiums become qualified. Once you're 65, you can use HSA money tax-free to pay for Medicare and other health coverage.1 The age that counts is yours as the account holder: if you aren't 65 yet, Medicare premiums for a spouse or dependent who is 65 or older generally aren't qualified.1

Medigap premiums stay out. One exception trips people up. Medicare Supplement premiums, the Medigap policies that fill Medicare's gaps, are not HSA-qualified, even after 65.1

The penalty on non-medical withdrawals disappears. Before 65, money you pull from an HSA for anything other than qualified medical care gets taxed as income and hit with an additional 20% tax. At 65, or earlier if you become disabled, that extra 20% goes away.1 Non-medical withdrawals are still taxed as ordinary income. Qualified medical spending stays tax-free.

There's a tradeoff at 65 too. Once you enroll in Medicare, you can no longer contribute to an HSA. Your contribution limit drops to zero starting with your first month of Medicare, and because Medicare coverage can be backdated, contributions made during a retroactive coverage period count as excess contributions.1 Spending is a separate test from contributing: distributions stay tax-free when they pay qualified medical expenses you incurred after you established the HSA.1 The rules and contribution mechanics live in IRS Publication 969.

The Honest Limits of an HSA for Long-Term Care

An HSA has hard edges. It's better to see them before you count on it for a care bill.

• You have to be eligible to contribute. No qualifying coverage, no contributions. For 2026 that means a high-deductible health plan, or a bronze or catastrophic plan of the kind the law now treats as one, with no other coverage the HSA rules don't permit.1
• The contribution caps set the pace. At $4,400 to $8,750 a year, plus the $1,000 catch-up at 55 or older, a balance builds only as fast as those limits allow.1 It's a supplement to a care-funding plan, not the whole plan.
• Medicare ends contributions. Beginning with the first month you're enrolled, your contribution limit is zero.1
• Only expenses after you open it count. Tax-free distributions are for qualified medical expenses you incur after you establish the HSA.1
• Meals and lodging have their own test. In a nursing home, home for the aged, or similar institution, they count if a principal reason for being there is to get medical care. If the reason is personal, they don't, and only the part of the cost that is for medical or nursing care qualifies.1
• Only a spouse inherits it as an HSA. If your spouse is the designated beneficiary, the account is treated as your spouse's HSA after your death. If the designated beneficiary isn't your spouse, the account stops being an HSA. Its fair market value becomes taxable to the beneficiary in the year you die. That taxable amount is reduced by any of your qualified medical expenses the beneficiary pays within 1 year after the date of death. If your estate is the beneficiary, the value goes on your final income tax return instead.1

None of this makes an HSA a bad idea. Paired with other tools, like a long-term care insurance policy or a broader plan for how to pay for senior care, it lets qualified care costs come out of money the IRS doesn't tax.

Learn More

Find personalized help working out whether an HSA fits your senior-care funding plan at brevy.com.

The information on Brevy.com is for educational purposes only and is not a substitute for professional legal, financial, or medical advice. Rules vary by state and program and change frequently. Always verify with the relevant agency or a qualified professional. Brevy is not a law firm, financial advisor, or healthcare provider.