Use Your HSA as an Investment Vehicle: How to Maximize Your Health Savings Account Value
Did you know you can use your HSA as an investment vehicle? Your Health Savings Account has similar properties to an IRA. Tax-free contributions and tax-free growth. Learn how to invest in your HSA, including contribution limits, IRS rules, and strategies to maximize your HSA value.
Why trust The Military Wallet? We’re a veteran-founded resource that has helped millions make strong financial decisions.
Advertiser Disclosure: The Military Wallet and Three Creeks Media, LLC, its parent and affiliate companies, may receive compensation through advertising placements on The Military Wallet. For any rankings or lists on this site, The Military Wallet may receive compensation from the companies being ranked; however, this compensation does not affect how, where, and in what order products and companies appear in the rankings and lists. If a ranking or list has a company noted to be a “partner,” the indicated company is a corporate affiliate of The Military Wallet. No tables, rankings, or lists are fully comprehensive and do not include all companies or available products.
The Military Wallet and Three Creeks Media have partnered with CardRatings for our coverage of credit card products. The Military Wallet and CardRatings may receive a commission from card issuers. You can read more about our card rating methodology here.
Opinions, reviews, analyses & recommendations are the author’s alone and have not been reviewed, endorsed, or approved by any of these entities. For more information, please see our Advertising Policy.
American Express is an advertiser on The Military Wallet. Terms Apply to American Express benefits and offers.
One financial product gaining a lot of attention lately is the Health Savings Account (HSA). The HSA lets you set aside money for medical expenses with minimal hassle.
HSAs are connected to high-deductible health plans (HDHPs). HDHPs require you to pay more out of pocket until you meet the deductible, but you also pay a lower monthly premium.
You can use HSA funds to cover out-of-pocket medical costs and keep saving in your HSA.
That’s the critical thing to remember about the HSA. The money is yours. No matter who offers the account, the money is yours. You can even open an HSA with a custodian that isn’t your employer’s or your health plan’s choice. You can also roll over your HSA to another custodian as you like.
Unlike Flexible Savings Accounts, the money in your HSA does not expire at the end of the year. You can leave your money in your HSA indefinitely, even if your health care plan changes and you are no longer eligible to contribute.
If you do it right, your HSA can work like another investment account.
How to Invest in Your HSA
Review your health care plan to see if you are eligible for a health savings account. HSA-eligible health care plans are becoming more popular with employers and employees because they often offer lower premiums than other health care plans.
You can also find HSA-eligible health care plans if you do not have an employer-sponsored plan. Some of these plans exist on the Affordable Care Act exchanges. Many individual health care plans from companies such as eHealthInsurance are also HSA-eligible.
Once you open your HSA, you can invest your funds accordingly. Investing in an HSA can be easier when your bank automatically links your HSA to an investment account.
I opened mine at HSA Bank, which offers flexibility, low fees and links your account with a Charles Schwab investment account (Schwab ranks among our top-rated brokerage firms). Here are the criteria I considered when opening an HSA.
Benefits of Investing in an HSA
An HSA combines the best elements of a traditional IRA (tax deduction for contributions) with the best of a Roth IRA (tax-free growth). You can also hold various investments in an HSA. Most HSA custodians offer money market funds and similar assets. While the returns aren’t always the highest, they are a stable way to invest your funds. Money market funds may be a good option if you think you’ll need to use your funds soon.
Some independent HSA custodians allow you to hold various investment types, such as index funds, ETFs, stocks, bonds and other investments. So, you can use your HSA as an extension of your overall investment portfolio and allocate your funds accordingly.
Money in your HSA grows the same way it does in an IRA. However, you must use it carefully. You can withdraw the funds, contributions and earnings – without penalty at any time for qualified medical expenses. If you use the money for nonmedical expenses, though, you’ll pay regular income taxes and a 10% early withdrawal penalty.
The 10% penalty is waived once you reach age 65. At that age, your HSA becomes just like another traditional IRA. You’ll pay regular income tax only on the amount you withdraw.
How and Why You Should Max Out Your HSA Plan Contributions
The IRS establishes the annual HSA contribution limits each year. In most years, the contribution increases.
Here are the current HSA contribution limits, along with the limits from some of the recent tax years:
| Tax Year | Individual | Family | Catch-Up Contributions (age 55 and over) |
|---|---|---|---|
| 2026 | $4,400 | $8,750 | $1,000 |
| 2025 | $4,300 | $8,550 | $1,000 |
| 2024 | $4,150 | $8,300 | $1,000 |
| 2023 | $3,850 | $7,750 | $1,000 |
| 2022 | $3,650 | $7,300 | $1,000 |
| 2021 | $3,600 | $7,200 | $1,000 |
| 2020 | $3,550 | $7,100 | $1,000 |
| 2019 | $3,500 | $7,000 | $1,000 |
| 2018 | $3,450 | $6,900 | $1,000 |
| 2017 | $3,400 | $6,750 | $1,000 |
| 2016 | $3,350 | $6,750 | $1,000 |
| 2015 | $3,350 | $6,650 | $1,000 |
| 2014 | $3,300 | $6,550 | $1,000 |
| 2013 | $3,250 | $6,450 | $1,000 |
| 2012 | $3,100 | $6,250 | $1,000 |
| 2011 | $3,050 | $6,150 | $1,000 |
| 2010 | $3,050 | $6,150 | $1,000 |
As you can see, the HSA contribution limit for family plans is $8,750 in 2026 (and $4,400 for individuals). Although the HSA is similar to an IRA, the IRS doesn’t treat it the same way, so it doesn’t count against your eligible IRA contribution limits.
Contributing the maximum to your HSA lets you shelter a large amount of money from taxes each year, and it grows tax-free until you decide to use it. This makes the HSA a flexible and powerful way to invest your money.
How You Should Invest With Your Health Savings Account
How you invest in your HSA depends on the factors you should consider when investing in any account – your timeline, risk tolerance and overall asset allocation.
If you plan to use your HSA for your current medical expenses, then you will most likely want to keep your HSA funds in a savings account, money market or certificate of deposit. This will preserve your spending power and expose your funds to the least risk.
If you don’t anticipate many medical expenses or believe you can pay for them from your cash flow, you may decide to invest your HSA funds much as you would an IRA. That means you can gear your investments more toward equities such as stocks, mutual funds or ETFs.
Whichever method you choose, reevaluate your HSA needs regularly. If your situation changes and you need access to the funds soon, you may want to adjust your HSA asset allocation.
Because your HSA investments are tax-deferred, you won’t pay taxes on gains when you trade within your HSA account. So you can invest in your HSA like an IRA, but don’t take too much risk with funds you may need soon.
How to Allocate Your HSA Investments in Your Portfolio
As mentioned above, your main determining factors should be your timeline and your risk tolerance. If you plan to let your money grow for a long time, you may want to include your HSA investments in your overall asset allocation.
Asset allocation is easy when you only have one or two investment accounts. But it gets complicated when you have multiple investments or retirement accounts. To make managing your investment portfolio easier, you can use a free online tool called Empower (formerly Personal Capital). Empower (formerly Personal Capital) aggregates your financial data and helps you analyze it. It gives you a powerful, free tool to understand how all your investments work together. This is important when you have multiple financial and investment accounts working together.
Empower (formerly Personal Capital) analyzes your investments and shows your asset allocation across all your accounts. From there, you can easily decide how to change your asset allocation. You can learn more in our Empower review, comparison to Mint.com (another money management tool) or by visiting the Empower website.
