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Health savings accounts (HSAs) are increasingly being considered by individuals looking to offset healthcare costs, which are set to rise significantly in 2026. But some HSAs also offer investment options that can simultaneously help savers grow their retirement income, financial experts share.
If someone is considering opening an HSA, they should first determine what their primary goals are, Maryann Vognild, a senior wealth advisor at Focus Partners Wealth, said in emailed comments.
“Is it for current healthcare needs or are you investing for the future?” Vognild wrote. If the HSA is meant to help with healthcare costs, the vehicle can be used so that “you’re generally paying less for the insurance up front.”
“You’re able to use tax-free money to help pay for your expenses today. You still get the benefit of being able to contribute to the HSA and having the money rollover to future years, but you’re not looking for lots of growth,” Vognild said of this scenario.
Next year, health insurers are expected to raise premiums for Affordable Care Act marketplace insurance by 26%, according to a recent analysis by KFF. The health policy organization also noted that, should enhanced premium tax credits expire at the end of 2025, enrollees could see their monthly premium more than double – rising, on average, by around 114%.
“This reflects people with incomes below four times the poverty level receiving less financial assistance and those with incomes over four times poverty no longer being eligible for financial assistance at all and therefore being hit by a double whammy of lost tax credit and higher insurer premiums,” KFF’s October report said.
Meanwhile, U.S. employers offering medical plans anticipate their median healthcare costs to increase by 10% next year, a survey by the International Foundation of Employee Benefit Plans found. This is up from an 8% increase in healthcare costs that U.S. employers projected for 2025.
Vognild, who has an HSA herself, noted that she keeps money in her account to disburse it in the future and has a “diverse portfolio built inside” of her account. “It’s rebalanced regularly, separate from my other investment assets,” she said via email.
HSAs are “triple tax-free,” in that they allow account owners to make tax-free contributions (reducing their taxable income), all while their earnings and distributions are tax free (as long as distributions are for qualified medical expenses), she explained.
“For those in high income brackets, it makes the most sense to use a health savings account as a very powerful investment account,” she added.
HSA Investment Options
HSAs can provide a range of investment options, from target date funds, to equities or bond funds, and some offer exposure to alternative investments, such as commodities and real estate, according to Vognild.
“Knowing what investments are available with the HSA provider is important before opening an account. If you plan to use the account for long-term investing, you need to make sure the account offers more than a single money market option. Each plan also has requirements around how much needs to be invested in the cash or money market fund before the excess can be invested in other options,” Vognild said.
“You are able to set up an HSA as long as you have an eligible health insurance plan,” which has been expanded under recent tax law, Vognild wrote. “You don’t have to participate in a health savings account with your employer, even if your health insurance is through that employer, however, you are limited in how much you can contribute based on your insurance coverage. The limitation in contributions includes the total contributed by you and your employer to any HSA,” she added.
New rules signed into law this July, under the One Big Beautiful Bill Act, are also expected to expand accessibility of HSAs, attracting as many as four million new participants to these accounts, according to research from Morningstar.
Evolution of HSAs
As the use of HSAs grows, some plan sponsors are providing investment options similar to those offered in defined contribution plans, Ryan Tiernan, an institutional retirement strategic growth counselor at Capital Group, shared in a blog post.
“Like retirement savers, HSA enrollees have varying risk tolerances and financial situations when investing for future health care costs,” Tiernan wrote. “An HSA investment menu can address a range of objectives and life stages much like a DC plan menu.”
Plan sponsors can apply a mix of investment options to HSAs, to include target date funds that invest for long-term health care costs “in a single investment solution,” or 401(k) mirroring – “offering a core investment menu similar to the DC plan (that) organizes the benefits package for employees and simplifies the due diligence process for employers,” he explained.
Tiernan also noted that “although HSAs were originally introduced as a cost-saving measure, many employers are realizing that these accounts can work effectively with a defined contribution (DC) plan to promote better retirement outcomes.”
Danielle Walker is a freelance journalist with 15 years of business reporting experience. She previously worked at Business Insider and Pensions & Investments, among other business publications. Her work has been published in the Financial Times, Barron’s and Chief Investment Officer. Danielle is currently based in Norfolk, Virginia.
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The views presented here do not necessarily represent those of Advisor Perspectives.
