So, you have a Health Savings Account (HSA), now what? While these accounts are similar to Flexible Spending Accounts (FSAs), one of the main differences between an HSA and an FSA is that you may be able to invest your HSA contributions.
Learn more about the pros and cons of investing your HSA, and why this may be a beneficial strategy to consider for your overall financial wellness.
The Basics of Investing Your HSA
Maintain a Minimum Balance
Before investing your HSA, your administrator may require you to maintain a minimum balance in your account. You will need to maintain this minimum amount to continue to invest. So, if you withdraw money and dip below the minimum balance, you will need to contribute more funds before you can continue to invest.
Consider Your Planned Health Expenses
If you are considering investing your HSA, it's important to ensure you have enough in your account to maintain the required minimum investment and the amount of money you anticipate using on your health expenses for the year.
The following hypothetical example illustrates how you could maintain a balance that meets both the minimum required balance for investing, as well as a safe amount of money to cover any anticipated health expenses.
- Your HSA administrator's minimum required balance: $2,500
- Your anticipated health costs for 2026 that you'd like to pay for with your HSA: $1,300
- Recommended total amount to keep in your HSA for the year: $3,800
Imagine you want to invest part of the money in your HSA. In this example, we'll use the 2026 maximum contribution limit for family coverage, which is $8,750:
- Starting balance: $0
- Your HSA annual election amount: $8,750
- HSA administrator minimum required balance: $2,500
- Your anticipated health costs for 2026 to cover with your HSA: $1,500
- Recommended amount to keep in your HSA for the year: $4,000
- Remaining amount you could choose to invest if you follow the above recommendations: $4,750
Weigh Your Options
As with any investment strategy, there are both pros and cons if you choose to invest your HSA.
Pros of Investing Your HSA
Tax-Free Growth: HSAs are one of the only accounts that provide tax-free distribution of account growth on your investments, if certain conditions are met. Even while you're investing in your HSA, if you need to access your funds to help pay for eligible medical expenses, you still have the option to access your funds.
Retirement Savings: Many people only use their HSAs as a short-term account to cover their immediate eligible medical expenses. However, HSAs can be an excellent tool to take advantage of in your retirement planning. You can contribute to an HSA in addition to your other retirement accounts, and once you reach the age of 65, you can use your HSA funds to pay for non-medical retirement needs (ordinary income tax applies). In addition, take tax-free distributions to pay for eligible medical expenses, including some health insurance premiums. Learn more about preparing for retirementâ–º
Asset Growth: You can choose to invest a portion of your HSA in optional market-based investments, which may experience growth in the value of your assets over time. This growth can be achieved through the accrual of additional interest or through the increase in value of investments purchased, both of which can outperform normal interest rates. This can help you grow the value of your HSA over the long term.
Cons of Investing Your HSA
Risk: All investments involve risk, and you may lose money on your investments. It is important to consider the risks associated with any investment you choose to make, including your HSA. When considering whether or not to invest, you should consider your time horizon or when you will need access to your funds. You should also consider the impact and frequency of market fluctuations, as it could affect the amount of your HSA funds.
Lastly, you should carefully consider both how much of your HSA assets you invest and where you invest those assets. It is important that you invest in a way that limits your risk to a level acceptable to you. Those HSA assets you can avoid using for longer periods of time may be excellent candidates for investing.
Choose What's Best for You
After reviewing the pros and cons of investing your HSA balance, it's important to review your financial plans and make the best decision for you and your family.
Consider these questions as you plan:
- Do I need to use my HSA funds in the near future?
- How much time do I have to grow my HSA if I choose to invest it?
- Can I weather any storms the market may face if I choose to invest my contributions?
- What growth could I expect to see if I choose to invest?
The answers to these questions may help you make the best decision for your family.
This blog is up to date as of February 2026 and has not been updated for changes in the law, administration or current event. This information is intended to be educational. It is general in nature and should not be considered financial, legal or tax advice. Consult an attorney or a tax professional regarding your specific situation.
Shop the HSA Store
Shop for Eligible Items
You may purchase HSA-eligible items online at the HSA Store. Browse medical supplies, over-the-counter medication, prescriptions, and more.
Purchases may result in a small commission to American Fidelity at no additional cost to you.
