{"id":37383,"date":"2025-10-28T17:14:11","date_gmt":"2025-10-28T17:14:11","guid":{"rendered":"https:\/\/financialrush.com\/?p=37383"},"modified":"2025-10-28T17:14:11","modified_gmt":"2025-10-28T17:14:11","slug":"benefits-of-investing-your-health-savings-account","status":"publish","type":"post","link":"https:\/\/financialrush.com\/?p=37383","title":{"rendered":"Benefits of investing your health savings account"},"content":{"rendered":"

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Peter Cade | Photodisc | Getty Images<\/p>\n<\/div>\n<\/div>\n<\/div>\n

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As open enrollment<\/a> arrives, millions of Americans face key decisions, such as picking health insurance. If the plan comes with access to health savings account<\/a>, or HSA, contributions, you could use the funds for long-term investments, experts say.\u00a0\u00a0\u00a0\u00a0<\/p>\n

While most workers spend HSA money<\/a> on yearly out-of-pocket health expenses, a small percentage invests the balance<\/a>, which can grow tax-free<\/a> for future medical costs.\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0<\/p>\n

“The plan is to go into retirement with a six-figure HSA,” said certified financial planner Dan Galli, owner of Daniel J. Galli & Associates in Norwell, Massachusetts. When coupled with other Roth and after-tax retirement funds, “this is the holy grail of retirement planning,” he said.<\/p>\n<\/div>\n

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More from Financial Advisor Playbook:<\/h2>\n
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Here’s a look at other stories affecting the financial advisor business.<\/p>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n

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More than 59 million Americans<\/a> had an HSA as of Dec. 31, 2024, according to a survey from Devenir, a company that provides HSA investment solutions and research, and the\u00a0American Bankers Association’s Health Savings Account Council. The survey polled the top 20 HSA providers.\u00a0<\/p>\n

President Donald Trump’s “big beautiful bill<\/a>” enacted in July expanded access to HSAs<\/a> by making more marketplace health plans HSA-eligible, among other changes.<\/p>\n

The interest in investing HSA funds comes as the cost of medical expenses in retirement continues to climb.\u00a0A 65-year-old retiring in 2025 can expect to spend an average of $172,500<\/a> on health care during their retirement years, up more than 4% from 2024, according to a July report from Fidelity Investments. This does not include the cost of long-term care<\/a>.<\/p>\n

Here are some of the key benefits of investing your HSA balance \u2014 and how it can help offset future health expenses.\u00a0<\/p>\n<\/div>\n

HSAs have triple-tax benefits<\/h2>\n
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To make health savings account contributions, you must have a qualifying high-deductible health insurance plan. For 2026, the HSA contribution limit<\/a> will increase to $4,400 for self-only health coverage or $8,750 for family plans, the IRS announced in May.<\/p>\n

For healthier clients, some advisors suggest picking a high-deductible plan for access to HSA contributions. But it can be risky: Typically, these plans have lower monthly premiums, but out-of-pocket expenses are higher.<\/p>\n<\/div>\n

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An HSA is a high priority for long-term savings because it’s the only account with three tax benefits. Contributions are tax-deductible, the funds grow tax-free and you don’t pay levies on withdrawals for medical expenses, which is “powerful,” according to Galli.<\/p>\n

In the meantime, if you pay for out-of-pocket health expenses, you can save the receipt and reimburse yourself anytime, Galli said.<\/p>\n<\/div>\n

Most HSA participants aren’t investing funds<\/h2>\n
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While HSAs offer generous tax benefits for long-term savers, most participants aren’t investing their balances, research shows.<\/p>\n

“The reality is that many people need to access their funds for current expenses,” said Hattie Greenan, director of research and communications for the Plan Sponsor Council of America.<\/p>\n

Two-thirds of employers offered investing options<\/a> for HSA contributions in 2024, according to the Plan Sponsor Council of America’s 2025 HSA survey released in September, which polled about 600 U.S. employers. But only 20% of HSA participants invested their assets in 2024, up from 18% in 2023.<\/p>\n

One reason for the small percentage of invested funds could be the minimum balance requirements, which were at least $1,000 for three-quarters of the companies polled, according to Greenan.<\/p>\n

If you’re using your HSA balance for current-year health expenses, that $1,000 minimum can be “hard to maintain,” she said.<\/p>\n<\/div>\n<\/div>\n\n
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