Tax Advantages of HSAs for High Earners
Written by Emily J. Thompson, Senior Investment Analyst
Updated: May 23 2026
0mins
Source: Yahoo Finance
- Annual Contribution Limit: In 2026, families covered by a qualifying HDHP can contribute $8,750 to their HSA, with minimum deductibles set at $1,700 for individual and $3,400 for family coverage, providing high earners with significant tax savings, potentially reducing their federal tax bill by approximately $2,800 in the first year, thereby enhancing the appeal of retirement savings.
- Investment Growth Potential: Compounding $8,750 annually at a 7% return can grow the account to roughly $382,000 over two decades, illustrating the advantages of HSAs in long-term investment compared to taxable accounts, which yield significantly lower net returns due to taxation.
- Reimbursement Strategy for Medical Expenses: The IRS allows medical expenses to be reimbursed in years following their occurrence, enabling users to pay from a taxable account, invest in the HSA, and reimburse themselves tax-free in the future, providing high earners with flexible financial management options.
- Retirement Medical Cost Planning: For households already capturing full employer matches, prioritizing HSA contributions over 401(k) is advisable, as HSAs allow tax-free withdrawals, especially relevant given that retirement medical costs are expected to reach six figures, highlighting the strategic advantage of HSAs in retirement planning.
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Analyst Views on HQY
Wall Street analysts forecast HQY stock price to rise
11 Analyst Rating
9 Buy
1 Hold
1 Sell
Moderate Buy
Current: 90.520
Low
89.00
Averages
117.09
High
129.00
Current: 90.520
Low
89.00
Averages
117.09
High
129.00
About HQY
HealthEquity, Inc. is engaged in providing technology-enabled services that enables consumers to make healthcare saving and spending decisions. The Company uses its technology to manage consumer tax-advantaged health savings accounts (HSAs) and other consumer-directed benefits (CDBs) offered by employers, including flexible spending accounts and health reimbursement arrangements (FSAs and HRAs), and to administer Consolidated Omnibus Budget Reconciliation Act (COBRA), commuter and other benefits. It provides consumers with payment processing services, personalized benefit information, the ability to earn wellness incentives, and investment advice. It offers an investment platform and access to an online-only automated investment advisory service to all of its members whose account balances exceed a stated threshold. It administers pre-tax commuter benefit programs through which employers are permitted to provide employees with commuter benefits including qualified transit and parking.
About the author
Emily J. Thompson
Emily J. Thompson, a Chartered Financial Analyst (CFA) with 12 years in investment research, graduated with honors from the Wharton School. Specializing in industrial and technology stocks, she provides in-depth analysis for Intellectia’s earnings and market brief reports.
HealthEquity Reports Significant Revenue Growth
- Revenue Growth: HealthEquity reported a 7% year-over-year revenue increase in Q1, with service revenue hitting a record $122.9 million, up 3%, indicating strong market performance and sustained customer demand.
- Profitability Improvement: Adjusted EBITDA reached $164.5 million, representing 46% of revenue and a 17% increase from last year, demonstrating significant progress in cost control and operational efficiency, thereby enhancing future profitability sustainability.
- Share Repurchase Plan: The company increased its share repurchase authorization by $1 billion, reflecting strong confidence in capital allocation and management's optimistic outlook on the company's growth potential.
- HSA Asset Growth: Total HSA assets grew by 19%, with new HSAs from sales increasing by 15%, not only enhancing the company's market share but also laying a foundation for future revenue growth, showcasing its competitive advantage in the health savings account sector.
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HealthEquity Reports Strong Q1 Growth with Raised Guidance
- Profitability Improvement: HealthEquity's first-quarter adjusted EBITDA margin increased to 46%, with net income reaching $69.4 million, demonstrating strong execution of the company's financial model, which is expected to drive stock price appreciation and enhance investor confidence.
- Expanded Share Buyback Plan: The company's board increased the share repurchase authorization by $1 billion, indicating management's confidence in the company's value, which is anticipated to further boost earnings per share and enhance shareholder returns.
- Significant HSA Asset Growth: Total HSA assets grew by 19% year-over-year, with 172,000 new HSAs added, reflecting a 15% growth rate, which not only increases market share but also enhances customer loyalty, driving future revenue growth.
- Optimistic Financial Outlook: The company raised its fiscal 2027 revenue guidance to between $1.41 billion and $1.42 billion, with GAAP EPS expectations increased to $2.88 to $2.95, indicating strong market demand and ongoing improvements in profitability.
See More
HealthEquity (HQY) Q1 2027 Earnings Transcript
See More
HealthEquity Q1 Earnings Exceed Expectations
- Earnings Beat: HealthEquity reported a Q1 non-GAAP EPS of $1.24, exceeding expectations by $0.12, which reflects the company's strong profitability growth and enhances market confidence in its future performance.
- Revenue Growth: Q1 revenue reached $354.6 million, a 7.2% year-over-year increase, surpassing market expectations by $2.3 million, indicating sustained demand in the health benefits management sector and driving robust overall business development.
- Financial Outlook: Management expects revenues for the fiscal year ending January 31, 2027, to be between $1.410 billion and $1.420 billion, aligning with market consensus, which demonstrates the company's stable revenue expectations and helps attract investor interest.
- Net Income Projections: The anticipated net income is between $242 million and $248 million, resulting in diluted earnings per share of $2.88 to $2.95, with non-GAAP net income projected at $392 million to $398 million, further solidifying the company's strong financial health image.
See More
HealthEquity Set to Announce Q1 Earnings on May 28
- Earnings Announcement: HealthEquity (HQY) is scheduled to release its Q1 2023 earnings on May 28 after market close, with consensus EPS estimates at $1.11, reflecting a 14.4% year-over-year growth, indicating ongoing improvement in profitability.
- Revenue Expectations: Analysts project HQY's revenue to reach $352.17 million, representing a 6.4% year-over-year increase, which underscores the company's robust performance in the healthcare insurance market and expansion of its customer base.
- Historical Performance: Over the past two years, HQY has exceeded EPS estimates 88% of the time and revenue estimates 100% of the time, showcasing the company's strong capabilities in market analysis and performance delivery.
- Estimate Revision Dynamics: In the last three months, EPS estimates have seen three upward revisions and five downward adjustments, while revenue estimates experienced five upward revisions and two downward adjustments, reflecting varying market perceptions regarding the company's future performance.
See More
Tax Advantages of HSAs for High Earners
- Annual Contribution Limit: In 2026, families covered by a qualifying HDHP can contribute $8,750 to their HSA, with minimum deductibles set at $1,700 for individual and $3,400 for family coverage, providing high earners with significant tax savings, potentially reducing their federal tax bill by approximately $2,800 in the first year, thereby enhancing the appeal of retirement savings.
- Investment Growth Potential: Compounding $8,750 annually at a 7% return can grow the account to roughly $382,000 over two decades, illustrating the advantages of HSAs in long-term investment compared to taxable accounts, which yield significantly lower net returns due to taxation.
- Reimbursement Strategy for Medical Expenses: The IRS allows medical expenses to be reimbursed in years following their occurrence, enabling users to pay from a taxable account, invest in the HSA, and reimburse themselves tax-free in the future, providing high earners with flexible financial management options.
- Retirement Medical Cost Planning: For households already capturing full employer matches, prioritizing HSA contributions over 401(k) is advisable, as HSAs allow tax-free withdrawals, especially relevant given that retirement medical costs are expected to reach six figures, highlighting the strategic advantage of HSAs in retirement planning.
See More
HealthEquity Reports Significant Revenue Growth
- Revenue Growth: HealthEquity reported a 7% year-over-year revenue increase in Q1, with service revenue hitting a record $122.9 million, up 3%, indicating strong market performance and sustained customer demand.
- Profitability Improvement: Adjusted EBITDA reached $164.5 million, representing 46% of revenue and a 17% increase from last year, demonstrating significant progress in cost control and operational efficiency, thereby enhancing future profitability sustainability.
- Share Repurchase Plan: The company increased its share repurchase authorization by $1 billion, reflecting strong confidence in capital allocation and management's optimistic outlook on the company's growth potential.
- HSA Asset Growth: Total HSA assets grew by 19%, with new HSAs from sales increasing by 15%, not only enhancing the company's market share but also laying a foundation for future revenue growth, showcasing its competitive advantage in the health savings account sector.
See More
HealthEquity Reports Strong Q1 Growth with Raised Guidance
- Profitability Improvement: HealthEquity's first-quarter adjusted EBITDA margin increased to 46%, with net income reaching $69.4 million, demonstrating strong execution of the company's financial model, which is expected to drive stock price appreciation and enhance investor confidence.
- Expanded Share Buyback Plan: The company's board increased the share repurchase authorization by $1 billion, indicating management's confidence in the company's value, which is anticipated to further boost earnings per share and enhance shareholder returns.
- Significant HSA Asset Growth: Total HSA assets grew by 19% year-over-year, with 172,000 new HSAs added, reflecting a 15% growth rate, which not only increases market share but also enhances customer loyalty, driving future revenue growth.
- Optimistic Financial Outlook: The company raised its fiscal 2027 revenue guidance to between $1.41 billion and $1.42 billion, with GAAP EPS expectations increased to $2.88 to $2.95, indicating strong market demand and ongoing improvements in profitability.
See More
HealthEquity (HQY) Q1 2027 Earnings Transcript
See More
HealthEquity Q1 Earnings Exceed Expectations
- Earnings Beat: HealthEquity reported a Q1 non-GAAP EPS of $1.24, exceeding expectations by $0.12, which reflects the company's strong profitability growth and enhances market confidence in its future performance.
- Revenue Growth: Q1 revenue reached $354.6 million, a 7.2% year-over-year increase, surpassing market expectations by $2.3 million, indicating sustained demand in the health benefits management sector and driving robust overall business development.
- Financial Outlook: Management expects revenues for the fiscal year ending January 31, 2027, to be between $1.410 billion and $1.420 billion, aligning with market consensus, which demonstrates the company's stable revenue expectations and helps attract investor interest.
- Net Income Projections: The anticipated net income is between $242 million and $248 million, resulting in diluted earnings per share of $2.88 to $2.95, with non-GAAP net income projected at $392 million to $398 million, further solidifying the company's strong financial health image.
See More
HealthEquity Set to Announce Q1 Earnings on May 28
- Earnings Announcement: HealthEquity (HQY) is scheduled to release its Q1 2023 earnings on May 28 after market close, with consensus EPS estimates at $1.11, reflecting a 14.4% year-over-year growth, indicating ongoing improvement in profitability.
- Revenue Expectations: Analysts project HQY's revenue to reach $352.17 million, representing a 6.4% year-over-year increase, which underscores the company's robust performance in the healthcare insurance market and expansion of its customer base.
- Historical Performance: Over the past two years, HQY has exceeded EPS estimates 88% of the time and revenue estimates 100% of the time, showcasing the company's strong capabilities in market analysis and performance delivery.
- Estimate Revision Dynamics: In the last three months, EPS estimates have seen three upward revisions and five downward adjustments, while revenue estimates experienced five upward revisions and two downward adjustments, reflecting varying market perceptions regarding the company's future performance.
See More
Tax Advantages of HSAs for High Earners
- Annual Contribution Limit: In 2026, families covered by a qualifying HDHP can contribute $8,750 to their HSA, with minimum deductibles set at $1,700 for individual and $3,400 for family coverage, providing high earners with significant tax savings, potentially reducing their federal tax bill by approximately $2,800 in the first year, thereby enhancing the appeal of retirement savings.
- Investment Growth Potential: Compounding $8,750 annually at a 7% return can grow the account to roughly $382,000 over two decades, illustrating the advantages of HSAs in long-term investment compared to taxable accounts, which yield significantly lower net returns due to taxation.
- Reimbursement Strategy for Medical Expenses: The IRS allows medical expenses to be reimbursed in years following their occurrence, enabling users to pay from a taxable account, invest in the HSA, and reimburse themselves tax-free in the future, providing high earners with flexible financial management options.
- Retirement Medical Cost Planning: For households already capturing full employer matches, prioritizing HSA contributions over 401(k) is advisable, as HSAs allow tax-free withdrawals, especially relevant given that retirement medical costs are expected to reach six figures, highlighting the strategic advantage of HSAs in retirement planning.
See More
