HSA Investing: 4 Things to Know Before Getting Started

April 22, 2025

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An HSA or Health Savings Account is where you could put away money to help pay for qualified medical expenses, such as prescriptions and doctor visits. However, not many people are aware that they may have the option to invest all or a portion of their account balance.

Ahead, we’ll go over the basics of HSA investing, so you can decide if it’s right for you.

1. Investing your HSA could help you maximize your savings and build wealth

It can be easy to think of your HSA as nothing more than another glorified savings or checking account, where you can add or withdraw money to help cover qualified medical expenses.

But it’s important not to forget that HSAs bring something a little extra to the table – specifically, their much-touted triple tax advantages.

Generally speaking:

Contributions may be tax-deductible.
Distributions are tax-free if you use them to pay for qualified medical expenses.
If you decide to invest some of your HSA money, any potential earnings are tax-free.

Given these potential tax benefits, investing your HSA could play an important part in your overall retirement strategy. Any tax-free earnings could help boost your healthcare savings and build wealth over time.

Here’s something else of note: After you turn 65, you can use your HSA money for non-healthcare related expenses. You’ll have to pay ordinary income tax on the withdrawals, but there’s no penalty for using your money to cover nonqualified expenses.

In this way, an HSA is similar to a 401(k) or traditional IRA, which you could tap into for retirement. But unlike those retirement accounts, HSAs have no required minimum distributions (RMDs). While that may not seem like a big deal, it means your money can stay invested until you need it.

Bottom line? Not only could an HSA be a great savings tool for your current healthcare expenses, but it could also help you invest for the future.

Good to know: HSAs are subject to their own set of tax rules. It’s a good idea to check in with a tax professional if you have any questions before you start investing. You can also get more information from IRS Publication 969.

2. HSA investment options differ from provider to provider

Now that you have an idea of some of the potential benefits of investing your HSA, let’s look at how you could get started.

Check with your HSA administrator

If you have an HSA already – like through your employer’s health plan – you can contact your HSA administrator or provider to learn more about your investment options. Depending on your provider, you may be able to choose and manage your own investments through a self-directed account.

Prefer a more hands-off approach? Some HSA providers also offer managed accounts with pre-selected investment funds you can choose from. You can decide how you want your money to be allocated based on your risk tolerance.

Looking to open an HSA account?

If you’re looking to open an HSA account, it helps to do a little comparative shopping. (But first double-check and make sure you’re qualified to open and contribute to an HSA – see IRS Publication 969.)

A quick online search will show the many HSA providers you can choose from. Some key details you’ll want to pay attention to are the investment options, fees, and any account minimums. For instance, some HSA accounts require you to have a minimum balance before they give you the option to invest.

Pay attention to investment fees: Generally, the less you have to put toward fees, the more money you could keep invested.

So, take a look at the account fees and see if they make sense given the services being offered. A percentage point here or there in fees may not seem like a big deal at first, but fees can really add up over time and eat into your potential returns.

Reaching your goal starts with saving for it.

See your saving options

3. HSA investment strategy: How much should you invest?

You usually have the option to invest some or all of your HSA account balance. So how much should you invest and how much should you keep in cash?

Healthcare spending can be difficult to predict. Some costs you can anticipate – for instance, regular prescription refills or routine doctor visits.

While there are no hard-and-fast numbers to follow (because it really depends on your healthcare needs in the near term), you can still figure out an appropriate “cash target” – the amount you want to have on hand to cover your medical expenses, expected or unexpected. And once you have your cash target, you could consider investing the rest over the long term.

To estimate your target, consider taking these two steps as a starting point:

Review your healthcare spending and see how you’ve used your HSA in the last few years. What were some routine medical bills you had? How much did you have left over in the account at the end of the year?

Think about adding a cash cushion for any unexpected medical expenses that might come up.

Also keep in mind:

No estimation is going to be perfect. Life happens. And from time to time, you may have to rely on your other savings, like your emergency fund, to help cover any unexpected costs.

Basic investment principles still apply when you invest through an HSA. That means you don’t want to pull money in and out of your HSA investments for emergencies or treat it like an ATM.

For any portion of your HSA balance that’s been invested, it’s a good idea to keep it invested for the long term. Generally speaking, staying invested for the long haul puts you in a good position to reach your goals.

If you need help coming up with your cash target, consider talking to a financial advisor who could review your overall financial situation and suggest an appropriate number.

4. HSA investing may not be right for everyone

While investing your HSA makes sense for some people, it may not be right for everyone. For instance, if you have a lot of medical expenses and need to dip into your HSA often, you may want to keep that money on hand (rather than investing it and then having to pull money in and out of the market).

Another important thing to remember: While investing could help grow your money over the long run, it does involve risk, and returns are not guaranteed. Market volatility, while normal, could mean ups and downs for your HSA balance. If you know you’ll need that money in the short term, it may be best to keep it saved.

Bottom line: Take a look at how you’ve used your HSA in the past as well as your overall financial health. Let that be your guide as you decide whether it makes sense for you to invest any portion of your HSA money.

This article is for informational purposes only and shall not constitute an offer, solicitation, or recommendation. This article was prepared by and approved by Marcus by Goldman Sachs® but is not a description of any of the products or services offered by and does not reflect the institutional opinions of The Goldman Sachs Group, Inc., Goldman Sachs Bank USA, or any of their affiliates, subsidiaries or divisions. Goldman Sachs Bank USA is not providing any financial, economic, legal, accounting, tax or other recommendation in this article and it is not a substitute for individualized professional advice. Information and opinions expressed in this article are as of the date of this material only and subject to change without notice. Information contained in this article does not constitute the provision of investment advice by Goldman Sachs Bank USA, or any of its affiliates, none of which are a fiduciary with respect to any person or plan by reason of providing the material or content herein. Neither Goldman Sachs Bank USA, nor any of its affiliates make any representations or warranties, express or implied, as to the accuracy or completeness of the statements or any information contained in this document and any liability therefore is expressly disclaimed.