Do I pay taxes on the monies in the HSA account not used for medical expenses?
All dollars you choose to deposit in the account are completely tax free while they remain in the account as well as any earnings you generate on those dollars while in the account. At age 65, you may keep the balance in your HSA account to use for future medical bills. You’ll never pay taxes on the interest or principal and you can also start withdrawing the funds to supplement retirement. Tax is only ever paid on principal or interest from the account if the money is withdrawn for a nonmedical expense. Also, there is a 10% penalty for withdrawing funds for nonmedical expenses before age 65 (unless an you qualify for an exception like a disability). When you reach 65, you’ll only be liable for taxes on the monies you withdraw that are not used for medical bill. You can withdraw & monies to pay for medical bills at any time after age 65 and never pay taxes on those funds.