HSAs as Investment Accounts: Providers and Strategies

Many hold the mistaken notion that Health Savings Accounts are only meant to pay medical bills with pre-tax dollars. With ingenuity, it can serve as both a short-term health fund and a long-term wealth accumulation account. 

The reasons behind the uniqueness of an HSA boil down to its triple tax advantage: contributions are tax-deductible, your money grows tax-free when invested, and withdrawals for medically qualified expenses are tax-free. There is no other account that offers all of these benefits. In this blog, we explore HSAs as investment accounts.

HSA Eligibility and Contribution Limits

Who Can Open an HSA?

Not everyone qualifies for an HSA. To be eligible, you must:

• Be enrolled in a High Deductible Health Plan (HDHP). For 2025, the IRS defines an HDHP as a plan with a minimum deductible of $1,650 for individuals and $3,300 for families.
• Not be enrolled in any other disqualifying coverage, such as a general health Flexible Spending Account (FSA) or certain employer-sponsored health plans.
• Not be claimed as a dependent on someone else’s tax return.

If you meet these requirements, you can open an HSA with a qualified provider.

Contribution Limits

Each year, the IRS sets limits on how much you can contribute. For 2025:

• Individuals can contribute up to $4,150.
• Families can contribute up to $8,300.
• If you are age 55 or older, you can contribute an additional $1,000 as a catch-up contribution.

These limits apply across all HSAs you may have, so if you have more than one account, your combined contributions can’t exceed the annual maximum.

Benefits of Maximizing Contributions

The more you contribute, the greater your benefits from tax savings and long-term growth potential. Consider this: contributing the maximum each year not only lowers your taxable income but also creates a pool of funds that can be invested in stocks, bonds, or ETFs. Over time, this compounding growth can become a powerful resource to cover both medical expenses and retirement costs.

Choosing an HSA Provider

Key Considerations

Not all HSA providers are created equal. Before opening an account, compare providers carefully based on the following factors:

1. Fees – Some providers charge monthly maintenance fees, while others may have investment fees or transaction costs. Look for a provider with low or no fees to maximize your growth.
2. Investment Options – Some HSAs only allow basic savings accounts, while others offer a wide range of mutual funds, ETFs, and bonds. The broader the options, the more flexibility you’ll have in building a portfolio.
3. Account Access and Tools – Online dashboards, mobile apps, and reporting features make it easier to track your contributions and monitor investments.

Top HSA Providers

A few leading providers stand out for their low fees and strong investment choices:

• Fidelity – Offers no maintenance fees and access to a wide range of mutual funds and ETFs.
• Lively – A modern HSA platform with easy online tools, investment options through brokers like TD Ameritrade, and no monthly fees.
• HealthEquity – Known for user-friendly tools and integration with many employer health plans.
• Optum Bank – One of the largest HSA providers with strong investment features and a well-established reputation.

When comparing providers, ask: Do they allow you to invest all your funds immediately, or do you need to maintain a minimum cash balance? What types of funds are available? How transparent are their fee structures?

Pro Tip: Beem can guide you through this process by helping you compare providers side by side, identify hidden fees, and match your investment goals with the provider’s offerings.

Investment Strategies for HSAs

Your HSA investment strategy should align with your healthcare needs, risk tolerance, and long-term goals. Here are three common approaches:

Conservative Strategy – Cash & Bonds

• Approach: Keep most funds in cash or low-risk bonds.
• Best for: Individuals who anticipate incurring regular medical expenses in the near future.
• Benefits: Low volatility, quick access to funds, and peace of mind knowing the money will be there when you need it.

Moderate Strategy – Balanced Portfolio

• Approach: Allocate funds across a mix of stocks, bonds, and ETFs.
• Best For: Individuals who want both growth and stability.
• Benefits: Offers potential growth while maintaining liquidity for medium-term needs.

Aggressive Strategy – Growth-Oriented Investments

• Approach: Invest primarily in equities, index funds, or growth ETFs.
• Best For: Long-term savers who don’t expect to use HSA funds for many years.
• Benefits: High growth potential, especially if funds are left untouched for decades and used during retirement.

Using Your HSA as a Retirement Account

Long-Term Investment Benefits

An HSA isn’t just for covering today’s healthcare bills—it can also play a significant role in your long-term retirement planning strategy. Once you turn 65, you can withdraw funds for any purpose without early withdrawal penalties. If the money is used for non-medical expenses, it will be taxed as ordinary income, like withdrawals from a traditional IRA or 401(k). On the other hand, if you use the funds for qualified medical expenses, those withdrawals remain tax-free. 

This dual-purpose flexibility makes HSAs one of the most versatile and tax-efficient retirement accounts available. Not only do you receive tax advantages upfront, but you also gain the freedom to use the funds later in life, either for healthcare or other financial needs, giving you more control over your retirement savings.

Planning for Healthcare Costs in Retirement

Healthcare is often one of the largest expenses retirees face. By investing in your HSA now, you’re building a dedicated pool of money to cover these future costs. Estimates suggest that a 65-year-old couple retiring today may need $300,000 or more to cover medical expenses throughout retirement.

Beem can help you model long-term HSA growth, showing how contributions and investment returns may help cover these projected expenses. With smart planning, your HSA can serve as both a retirement healthcare fund and an extra source of income.

Maximizing Your HSA: Tips and Best Practices

Here are some strategies to get the most out of your HSA:

• Start Early – The sooner you begin contributing and investing, the more time your funds have to grow tax-free.
• Invest Unused Funds – Keep enough in cash for current-year expenses, but invest older contributions for long-term growth.
• Diversify Investments – Spread your funds across various asset classes to manage risk effectively. Don’t put all your HSA money into a single stock or sector.
• Review Regularly – Check in on your HSA investments at least once a year. Rebalance your portfolio as your healthcare needs and financial goals change.
• Use Beem for Planning – Beem can simulate investment growth, compare providers, and help track contributions so you always stay on target.

Conclusion

An HSA is one of the most versatile and tax-advantaged accounts available today. By using it strategically as an investment account, you can maximize its benefits, build wealth for future healthcare expenses, and even supplement retirement savings. The keys to success are understanding eligibility and contribution rules, and choosing the right provider with the best investment options.

A strategy that aligns with your goals, and monitoring and adjusting your investments, also helps. With guidance from tools like Beem, you don’t have to navigate these decisions alone. Beem helps you compare providers, plan contributions, simulate investment growth, and track your progress—making your HSA not just a savings account, but a cornerstone of your long-term financial plan. Download the app here.

FAQs for HSAs as Investment Accounts: Providers and Strategies