These two accounts serve different purposes, but when used together, they create a powerful financial strategy that helps you cover today’s expenses while setting you up for long-term savings. Let’s break down why pairing an HPA with an HSA is a smart money move that puts you in control of your healthcare costs.
What’s the Difference Between an HPA and an HSA?
Before we dive into how they work together, let’s define what makes them unique:
- HSA (Health Savings Account): A tax-advantaged savings account for those with a high-deductible health plan (HDHP). You contribute pre-tax dollars, and the money grows tax-free, helping you save for medical expenses now and in the future.
- HPA (Health Payment Account): A flexible payment tool that gives you immediate access to funds for healthcare costs with no interest or fees. Instead of worrying about having enough in your HSA to cover a bill, your HPA lets you pay for care upfront and spread the cost over time.
Note: If you're not already enrolled in a high-deductible health plan (HDHP), it might be worth considering. These plans typically come with lower monthly premiums, so you can redirect those savings into your HSA.
Now, let’s talk about the best ways to use these accounts together.
Use Your HPA for Today, Let Your HSA Grow for Tomorrow
One of the biggest benefits of an HSA is that your funds roll over year after year and can even be used in retirement. Better yet, you can invest those funds, which means the longer you leave money in your HSA, the more valuable it becomes.
The challenge? Most people end up dipping into their HSA for everyday medical expenses.
Here’s where an HPA comes in. Instead of spending down your HSA balance every time you need to see a doctor or pick up a prescription, an HPA can be your first line of defense to pay for those costs.
💡 Smart Move: Treat your HSA like an investment account and your HPA like your go-to payment card for everyday healthcare expenses.
Keep Your Cash Flow Strong
Healthcare expenses aren’t always predictable. Maybe you need new glasses this month, or your child’s surprise ER visit hits right before rent is due. If all you have is an HSA, you might have to withdraw more than you’d like just to cover the bill. But, if you also have an HPA, you don’t have to tap your savings just because of an unexpected expense.
When you pay with your HPA, you can work that expense into a series of predictable payments that are automatically deducted from future paychecks. This way you can set it and forget it.
💡 Smart Move: Use your HPA to manage cash flow so you never have to choose between your health and your budget.
Maximize Your Tax Advantages
One of the biggest perks of an HSA is its triple tax advantage:
- Pre-tax contributions lower your taxable income.
- Tax-free growth means your balance can be invested, compounding over time.
- Tax-free withdrawals for qualified medical expenses help you save more.
But here’s the catch: If you’re constantly spending your HSA balance, you’re missing out on those tax benefits.
💡 Smart Move: Prioritize your HSA for long-term savings while using your HPA to handle immediate costs without disrupting your financial strategy.
Stay Prepared for the Unexpected
Life happens. Whether it’s an unplanned surgery, a new prescription, or a dental emergency, having only one financial tool can leave you in a tough spot.
With both an HPA and an HSA, you have options. You can:
- Use your HPA first to keep your savings intact.
- Contribute to and invest your HSA so it’s there for you later in life.
- Reduce financial stress by knowing you’re covered for both short-term and long-term needs.
💡 Smart Move: Think of your HSA as a rainy-day fund and your HPA as your everyday umbrella—you’ll always have what you need, no matter what comes your way.
The Bottom Line: Build a Smarter Financial Strategy
Pairing an HPA with an HSA is a game-changer for managing healthcare costs. Instead of relying on just one account, you can:
- Use your HPA for immediate expenses while letting your HSA grow.
- Protect your cash flow by spreading costs over time.
- Maximize your tax benefits and long-term savings.
- Always be prepared for both planned and unexpected costs.
Healthcare expenses don’t have to be stressful. With an HPA and HSA working together, you get the best of both worlds—flexibility for today, savings for tomorrow.
This content is for informational purposes only – it should not be treated as legal, tax, investment, or financial advice. Please consult with your tax or financial advisor for advice specific to your situation.
