HSA 101 for Beauty Pros: What It Is, How It Works, and How to Get Started

If you’re a salon owner, booth renter, independent educator, or distributor, you already know income can fluctuate yet, healthcare costs don’t care. A Health Savings Account (HSA) is one of the most practical (and overlooked) tools for protecting your budget and lowering your taxes, as long as you qualify.

What is an HSA?

An HSA is a special savings account you can use to pay for qualified medical expenses, and it comes with major tax advantages. Think of it as a “healthcare wallet” which can also double as a long-term savings tool. The money is yours, it rolls over year to year, and it stays with you even if you change jobs.

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The “triple tax advantage”

HSAs are popular because they can be tax-friendly in three ways:

1. Contributions can be tax-deductible (or pre-tax through payroll if you pay yourself W2).
2. Growth is tax-free (interest/investment gains aren’t taxed).
3. Withdrawals for qualified medical expenses are tax-free.

In addition,  there’s a bonus many people don’t realize: after age 65, you can use HSA money for non-medical expenses without the extra penalty (you’d just pay regular income tax, similar to a traditional retirement account).

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How an HSA works

1. You put money into the HSA.
2. You use it to pay or reimburse yourself for qualified medical expenses.
3. Unused money stays in the account and can build over time.
   

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Who qualifies for an HSA?

The big requirement: you must be enrolled in a High Deductible Health Plan (HDHP) to contribute to an HSA.
This is common for:

• Booth renters and independents buying their own insurance
• Small business owners choosing a lower-premium plan
• Families who want tax savings and can manage higher deductibles

Important: Not every plan with a “high deductible” label qualifies as an HSA-eligible HDHP.  Your insurer will usually state clearly if it’s HSA eligible.

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2026 HSA contribution limits

For 2026, the contribution limits are:

• $4,400 for self-only coverage
• $8,750 for family coverage
• + $1,000 catch-up if you’re age 55+ (and not enrolled in Medicare)

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What can beauty pros use an HSA for?

Here are common, real-life examples that apply to busy people on their feet all day:

• Doctor visits, specialist visits, copays
• Prescriptions
• Dental care (cleanings, fillings, crowns)
• Vision care (eye exams, contacts, glasses)
• Physical therapy or chiropractic care (when medically related)
• Mental health care

What you generally can’t use it for: cosmetic procedures done purely for appearance (unless they’re medically necessary under IRS rules).

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How to get started

1) Confirm your health plan is HSA-eligible
Look for the words “HSA eligible” or “HSA-qualified HDHP” in your plan documents, or call your insurer.

2) Open an HSA (3 easy routes)

• Through an employer (if offered)
• Through a bank or credit union
• Through an investment platform (often offers mutual funds once your balance reaches a minimum)

3) Set your contribution amount

• If self-employed, you can contribute directly on your own schedule.
• If employed, payroll contributions are often easiest.

4) Use it smart

• Pay medical expenses with the HSA card, or pay out of pocket and reimburse yourself later.
• Save receipts (digitally is fine). Strong record-keeping matters.

5) Don’t forget tax filing basics
Most people report HSA contributions and distributions on IRS Form 8889 when they file taxes.

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BONUS;  Employers can use HSAs as an employee benefit.  Yet, you must follow the rules;

• The HSA belongs to the employee, not the employer. The employee owns the account and keeps it even if they leave the job.

• Employers can contribute money to an employee’s HSA (many do this to offset the higher deductible of an HSA-eligible plan).

• Employers can also let employees fund their HSAs through payroll deductions (often pre-tax), usually set up through a Section 125/cafeteria plan.

The main “catch”: employees generally must be enrolled in an HSA-eligible High Deductible Health Plan to contribute (and usually to receive/benefit from employer contributions).

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Your body is your tool, an HSA is part of protecting your “equipment.” Feet, hands, back, eyes.  This account helps you budget for the care that keeps you working comfortably and consistently.

Contact your Insurance agent for more details and to get started.  It’s smart Business.  DO IT NOW!

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CJ Murray, President