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With open enrollment season getting underway, health savings accounts are worth considering for more than just paying medical bills.
That’s because you can invest the money in an HSA and let it grow for decades, with tax advantages that can make the account an especially powerful way to save for retirement.
HSAs are “sneaky-good and very underrated” investment tools, says John Bell, a certified financial planner and founder of Free State Financial Planning. For those who are eligible, he generally puts maxing out an employer-sponsored HSA near the top of his saving priorities, just behind getting the full employer match in a 401(k), and ahead of funding a Roth IRA or taxable brokerage account.
That said, you shouldn’t choose a health plan just to get access to an HSA’s investment potential. Whether an HSA-eligible plan makes sense depends first on your healthcare needs and the costs and coverage of the plans available to you, CFPs tell CNBC Make It.
Why financial planners love HSAs
Like the more common flexible spending account, or FSA, an HSA lets you set aside tax-advantaged money for qualified medical expenses, such as doctor visits, prescription drugs and dental care.
One important distinction is that to contribute to an HSA, you generally must be enrolled in a high-deductible health plan. For 2027, such plans have a minimum deductible — the amount you pay out of pocket before coverage kicks in — of $1,750 for individuals and $3,500 for families. FSAs don’t have the same insurance requirement and are often offered alongside more traditional copay insurance plans, which tend to come with higher premiums and lower deductibles.
But HSAs differ from FSAs in a few other important ways. HSAs stay with you if you change jobs, and unlike most FSAs, they don’t come with a “use it or lose it” rule requiring you to spend money in the account over a certain period. Instead, unspent money rolls over from year to year.
And perhaps most importantly — and what makes HSAs “sneaky-good” as an investment tool — the money can often be invested and left to grow for years. That means an HSA can double as a long-term investment account, much like a 401(k) or brokerage account.
Despite that investment potential, relatively few people take advantage of it. Just 11% of HSAs held investments as of midyear 2026, according to Devenir, an HSA research and investment firm.
That’s despite some unusually generous tax advantages for investors.
An HSA combines “the best parts of traditional and Roth IRAs” through what’s commonly called a “triple tax advantage,” says Robert Persichitte, a CFP and CPA at Delagify Financial:
- You don’t pay federal income tax on the money you put in.
- Your investment gains aren’t taxed. That means your money can grow and compound without Uncle Sam taking a cut along the way.
- The money isn’t taxed when you take it out for qualified medical expenses.
You don’t need an employer to open an HSA, as long as you have an HSA-eligible health plan. And since 2026, people buying their own insurance have more options, as all Bronze and Catastrophic plans sold on the Affordable Care Act marketplace are HSA-eligible. But workplace HSAs can come with additional benefits: An employer may contribute money to the account, and money you put in through your paycheck can often avoid Social Security and Medicare taxes as well.
If you can afford to leave money in your HSA and pay current healthcare expenses out of pocket, CFPs say there can be good reason to hold onto the money for retirement, when healthcare costs tend to rise with age.
A 65-year-old retiring in 2026 can expect to spend an average of $185,500 on healthcare and medical expenses over the course of retirement, according to Fidelity Investments.
“Healthcare is one of the few retirement expenses we can virtually guarantee,” says Corinna Rose, a CFP at Bell Investment Advisors. “Whether it’s prescriptions, Medicare premiums, long-term care costs or routine medical expenses, most retirees will spend money on their health one way or another.”
Another advantage: There’s no time limit on when you can withdraw money from an HSA to cover a past qualified medical expense. For example, if you pay a $5,000 medical bill out of pocket at age 50, you could withdraw $5,000 tax-free at age 65, as long as you kept the necessary records.
Persichitte has used that strategy himself. He waited three years to reimburse himself after breaking his arm, giving the money in his HSA more time to grow.
Taken together, the tax advantages are why Persichitte ranks HSAs so highly. Once you’ve contributed enough to a 401(k) to get the full employer match, he generally recommends maxing out an HSA before putting more money into a 401(k), Roth IRA or taxable brokerage account.
How to know if an HSA is right for you
As attractive as HSAs can be as investment accounts, their investment potential alone isn’t a reason to seek one out.
“HSAs are extremely valuable, but don’t make an isolated decision on whether to own one,” says Michael Schramm, a CFA charterholder and author of the forthcoming book “Emotional Finance.” “Instead, step back and ask which health plan’s right for you.”
That means comparing the actual costs and coverage of the plans available to you, including premiums, deductibles and out-of-pocket maximums, along with any money your employer contributes to an HSA, Schramm says.
Higher-deductible plans generally trade lower monthly premiums for higher upfront healthcare costs, Schramm says. That can work well for someone who doesn’t expect to need much medical care. But if you anticipate a lot of medical expenses, you could end up paying thousands of dollars out of pocket before your insurance starts picking up the bill.
Having emergency savings matters, too. An HSA-eligible plan may be easier to manage if you have enough cash set aside to cover your deductible without taking on debt.
That said, there are risks in using the money in your HSA to buy investments. Stocks and bonds have historically rewarded long-term investors, but they can lose value, and past performance doesn’t guarantee future returns. Money you expect to need for near-term medical expenses may be better kept in cash.
For 2027, you can put up to $4,500 into an HSA if you have self-only coverage, or $9,000 if you have family coverage. People age 55 and older can contribute an additional $1,000. Any money your employer contributes counts toward those limits.
And while the money can ultimately be used for purposes other than healthcare, doing so before age 65 generally means paying income tax plus a 20% additional tax. After 65, that additional tax goes away, although nonmedical withdrawals are still generally subject to income tax.
For someone who chooses an HSA-eligible plan and can comfortably handle its potential out-of-pocket costs, however, the HSA can be much more than a way to pay this year’s medical bills. It can be a long-term investment account, too.
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