How to Invest With Your HSA, and Why
Health savings accounts have great benefits, including a triple tax advantage and the ability to invest your savings.
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Managing Editor Nerdy takeaways
- A health savings account (HSA) helps save toward medical expenses and also offers triple tax benefits.
- Those benefits include tax-deductible contributions, tax-free growth and tax-free withdrawals.
- You can invest HSA dollars the same way you would an individual retirement account (or other investment account).
- Make HSA contributions by the tax-filing deadline to lower your taxable income.
Health savings accounts, or HSAs, are tools that pair with a high-deductible health insurance plan and make saving up for that deductible less painful. Think of it like a home for your medical money. Just like a 401(k) or an IRA, you’ll need to put money into the account before you make investments. Then, after you fund the account, you can start investing.
You can use money you put into an HSA to pay for qualified health expenses. And if you don't need it? You can invest that HSA money so it grows until you do need the money.
HSA investment options
HSA providers offer a range of investment options, which may include:
- Stocks and bonds
- Mutual funds
- ETFs
Some HSAs offer tools that help you choose your investments. They also may provide automatic rebalancing so your portfolio stays within your preferred asset allocation. There may be minimum investment requirements before you can invest in some options.
HSAs offered through an employer may have fewer options for how you can invest your money.
Whatever option you choose, investing your money through an HSA will likely allow it to grow faster than by saving alone.
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Take advantage of the triple tax benefit
Once you start investing through your HSA, you can begin reaping the rewards. One of the biggest is the triple tax benefit, said Victor Medina, a certified financial planner and founder of Palante Wealth Advisors in Pennington, New Jersey.
These are the main tax advantages:
- Contributions are tax-deductible.
- Growth is tax-free.
- Distributions are tax-free when used for qualified medical expenses.
"Unlike a 401(k) or IRA, you don’t have to deduct money from the account at a certain age," Medina said.
If you’re investing over the long term in your HSA, that tax-free growth can make a significant difference in the amount of money you keep.
Prepare for long-term care
Thinking about getting older can be challenging for many reasons, not least of all because of the financial burden that can come with aging. For example, Genworth Financial's 2025 Cost of Care Survey found:
- The median annual cost of an in-home health aide is $77,792.
- A private room in a nursing home costs about $127,750 per year.
But investing in an HSA can allow you to prepare for those expenses in advance.
Here's a scenario: Say you invested $200 in an HSA every month starting when you were 30 years old. And you earned the stock market’s standard 10% annual return. By the time you were 70, you could have almost $1.3 million — a significant nest egg for your golden years.
It may be tempting to use your HSA money along the way. But Faron Daugs, a CFP and CEO of Harrison Wallace Financial Group in Libertyville, Illinois, often advises against that.
“With clients that are generally working and still making a living, if they do qualify to contribute, I often encourage them not to use those funds on an annual basis, so let them sit aside and grow almost like you would in an IRA,” says Daugs.
Pay yourself back later
If you can avoid taking out HSA funds as you go, you can reap the benefits down the road. That's because you can roll over HSA funds from year to year. That's a major difference between HSAS and FSAs, or flexible spending accounts. With an FSA, you have to spend the money within a specific time, or you lose it.
“You are not required to reimburse yourself in the same year," Medina said. "You are only restricted to reimbursing yourself for expenses that occurred after the date the account was established."
That means you could put money in the account now and let it grow for years. When you take it out as a lump sum in the future, it's not taxed. “Make sure to keep the receipts for what you paid out of pocket for medical expenses,” Medina said.
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NWWP is an SEC-registered investment adviser. Registration does not imply skill or training. The calculator is provided for informational and educational purposes only.
Hack your IRA
According to Daugs, HSAs have another little trick up their sleeve. You can rollover funds from a traditional or Roth IRA into your HSA. The amount could be up to your annual HSA contribution limit for that year.
The rollover helps if you have an unexpected medical expense and your HSA isn’t as fleshed out as you’d like it to be.
» MORE: How to invest your 401(k)
But while HSAs have a lot of benefits, they aren’t for everyone. Participants must be on a high-deductible plan to contribute to an HSA. That can be a deal-breaker for some. The health plan you choose during open enrollment will depend on your situation and the options available to you.
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- 1. Genworth Financial. Cost of Care Survey. Accessed Sep 25, 2025.
