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As open enrollment arrives, millions of Americans face key decisions, such as picking health insurance. If the plan comes with access to health savings account, or HSA, contributions, you could use the funds for long-term investments, experts say.
While most workers spend HSA money on yearly out-of-pocket health expenses, a small percentage invests the balance, which can grow tax-free for future medical costs.
“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.
More than 59 million Americans 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 American Bankers Association’s Health Savings Account Council. The survey polled the top 20 HSA providers.
President Donald Trump’s “big beautiful bill” enacted in July expanded access to HSAs by making more marketplace health plans HSA-eligible, among other changes.
The interest in investing HSA funds comes as the cost of medical expenses in retirement continues to climb. A 65-year-old retiring in 2025 can expect to spend an average of $172,500 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.
Here are some of the key benefits of investing your HSA balance — and how it can help offset future health expenses.
HSAs have triple-tax benefits
To make health savings account contributions, you must have a qualifying high-deductible health insurance plan. For 2026, the HSA contribution limit will increase to $4,400 for self-only health coverage or $8,750 for family plans, the IRS announced in May.
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.
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.
In the meantime, if you pay for out-of-pocket health expenses, you can save the receipt and reimburse yourself anytime, Galli said.
Most HSA participants aren’t investing funds
While HSAs offer generous tax benefits for long-term savers, most participants aren’t investing their balances, research shows.
“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.
Two-thirds of employers offered investing options 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.
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.
If you’re using your HSA balance for current-year health expenses, that $1,000 minimum can be “hard to maintain,” she said.
