The Investment Account You Might Be Missing: HSA

No matter your investment strategy, the opportunity to invest 100% tax-free and avoid taxes on any investment growth, is unique. Investors need to understand the HSA (health savings account).

While the HSA was designed for healthcare costs, their tax structure mimics a 401(k) or IRA. You can use this IRS structure to your advantage. Before we get started, you can check your HSA-eligibility and determine if your health insurance plan qualifies you to make HSA contributions.

Why HSAs Matter for Investing

HSA tax structure allows for tax-deductible contributions, tax-free growth, and tax-free distributions (if you use the funds for qualified out-of-pocket medical expenses). Let’s translate this to HSA investing. These triple-tax benefits enable individuals and families to leverage their HSA contributions for unencumbered tax-free growth.

2018 HSA contribution limits are $3,450 for individuals and $6,900 for families. Imagine if you had that money to invest? This is likely why some of the largest HSA investment accounts, now have over $200,000 in funds. That is not a typo.

At the age of 65, HSA funds can be used for anything (not just health expenses), just like 401(k). Just pay income taxes at that point. No penalty. They also don’t require mandatory distributions. You can let your HSA investments grow well into your 70s, 80s, and 90s, without interruption.

HSA Investing Details

Choice is fantastic. Flexibility allows us to choose a personalized path. HSA investing provides that option. HSA investments are not encumbered by overbearing IRS regulations. As long as your HSA provider enables these features, you can invest in individual stocks, bonds, CDs, ETFs, and mutual funds. Find the personal investment strategy that works for you, without limits.

These factors are one reason why HSA investments assets have eclipsed $10 billion and are growing 45% year over year.

Retirement Investing

Want to save more tax-free funds for retirement? Or add more flexibility so you don’t have to wait until 59 and 1/2 years of age to access your funds (or be forced to pay a tax penalty), like with a 401(k)? Use an HSA to complement, supplement, or replace your existing retirement investing strategy.

Combine the tax-power of an HSA and 401(k) to become an ‘ultra investor’. HSAs and 401(k)s create the most retirement tax-savings you can get, legally, from the IRS. The more you save, the more you can invest.



Opening an HSA creates more saving and investing opportunity. Coupling tax-free contributions and growth with the power of compound interest is going to leave you with a more robust investment strategy. And hopefully more money for retirement.