Does the penalty for using health savings account money for non-medical expenses disappear entirely at age 65? Does that mean I could withdraw the money after age 65 for a vacation and just pay taxes on the
Yes to both questions. You’ll have to pay a 20% penalty plus income taxes if you withdraw money from an HSA for non-qualified expenses before age 65. But the penalty disappears at 65, and you’ll just have to pay taxes on the withdrawal if you use the money for anything other than eligible medical expenses at that point—similar to the tax deferral of a 401(k).