HealthEquity blog


3 reasons to invest your HSA dollars

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Whether you have health insurance through your employer or another organization, you’re likely already familiar with a health savings account (HSA)—a specific type of savings account that lets you set aside money for qualified medical expenses. Maybe you’re even contributing to an HSA currently, in which case, high-five! You’re already planning ahead for your future. While having money set aside in your HSA is an excellent way to ensure you’re financially prepared for future medical expenses, you may be missing out on another major HSA benefit: investing your funds.1

 

Powerful retirement engine

Just how powerful of an investment tool is your HSA? Well, we did some digging and found that in 2021, those who invested their HSA funds have over 6.6 times the amount in their HSA compared to those who didn’t invest. In other words, those who invested had on average of over $17,000 in their account compared to the $2,000 average of those who did not invest.2 That’s a lot of money left on the table.

Luckily, investing your HSA funds doesn’t have to be complicated. Here are three reasons to consider investing your HSA balance today.


1. Avoid climbing healthcare costs

It’s an unfortunate truth—healthcare costs are on the rise, and they’re projected to keep increasing. In the last ten years, family coverage premiums have steadily increased by 47%, and the COVID-19 pandemic has only been adding to the economic pressure.3

With all this uncertainty, simply having a balance in your HSA may not be enough to plan ahead for future medical expenses. For peace of mind, you can invest your HSA funds and potentially help you stay ahead to offset any rising healthcare costs.

 

2. Boost your retirement income

While HSAs can be an excellent long-term investment vehicle, our research shows that only 20% of people view HSAs as an investment, and only 7% of people actual invest their HSA dollars.2 

By pairing your HSA with other retirement accounts, you’ll be able to maximize your after-tax retirement assets. Plus, when you need to cover qualified medical expenses during your retirement, you won’t need to dip into your cost-of-living expenses.4

 

3. Save more on your taxes

As costs for healthcare and living expenses continue to rise, you can get ahead on your taxes by utilizing your HSA funds. Unlike other investment accounts, HSAs allow you to put money in on a pre-tax basis, where you can grow your savings tax-free and take the money out (also income tax-free) when you need to use it for qualified medical expenses. This makes it easy for you to get triple the tax advantages on your healthcare funds.5

 

Your choice of ways to invest your HSA dollars

When you’re ready to invest your HealthEquity HSA dollars, you’ll have access to two powerful advisory tools available from HealthEquity Advisors, LLC: GPS and Autopilot.6 GPS is an algorithm-based guidance tool that suggests investment options based on your age and overall investment goals. With GPS, you can select your own investments based on targeted advice—ideal if you prefer more control at your fingertips.

Autopilot, on the other hand, allows you to set it and forget it. After you create your risk profile, Autopilot automatically rebalances your portfolio and takes control of your investments. This is a great option if you are new to investing or lack the time to carefully research investment choices. Get more details in our HSA Investment Guide.

If you prefer to manage your own investments, you can always elect to manage your own investment portfolio through the self-driven service level option, available through HealthEquity.

 

Key takeaways

Now you understand your HealthEquity HSA is valuable in many ways. And you have the resources at hand to invest in your future with confidence. Lean on resources in our HSA Guide and watch a short webinar on harnessing the power of your HSA.

 

1Investments are subject to risk, including the possible loss of the principal invested, and are not FDIC or NCUA insured, or guaranteed by HealthEquity, Inc. Investing through the HealthEquity investment platform is subject to the terms and conditions of the Health Savings Account Custodial Agreement and any applicable investment supplement. Investing may not be suitable for everyone and before making any investments, you should carefully consider the investment objectives, risks, charges and expenses of any mutual fund before investing. A prospectus and, if available, a summary prospectus containing this and other important information can be obtained by visiting the fund sponsor’s website. Please read the prospectus carefully before investing.

22021 Midyear Devenir HSA Research Report - Devenir

3Summary of Findings – 9805 | KFF

4After age 65, if you withdraw funds for any purpose other than qualified medical expenses, you will be subject to income taxes. Funds withdrawn for qualified medical expenses will remain tax-free.

5HSAs are never taxed at a federal income tax level when used appropriately for qualified medical expenses. Also, most states recognize HSA funds as tax-deductible with very few exceptions. Please consult a tax advisor regarding your state’s specific rules.

6Investments are subject to risk, including the possible loss of the principal invested and are not FDIC or NCUA insured, or guaranteed by HealthEquity, Inc.  HSA holders may select mutual funds for investment through the HealthEquity investment platform but HealthEquity, Inc. does not provide investment advice. HealthEquity Advisors, LLC, a wholly owned subsidiary of HealthEquity, Inc. and an SEC-registered investment adviser, provides web-based investment advice to HSA holders that subscribe for its services (minimum thresholds and additional fees apply). Registration does not imply endorsement by any state or agency and does not imply a level of skill, education, or training.  Investing may not be suitable for everyone.  You should carefully consider the investment objectives, risks, charges and expenses of any mutual fund before investing. A prospectus and, if available, a summary prospectus containing this and other important information can be obtained by visiting the fund sponsor’s website. Please read the prospectus carefully before investing.

HealthEquity does not provide legal, tax, financial or medical advice. Always consult a professional when making life-changing decisions.

Topics: HSA, HSA investing, tax savings, retirement, health savings

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