How to Invest in a Health Savings Account for Triple Tax Benefits


You can get triple tax benefits by investing in a health savings account (HSA), as well as withdrawing money tax-free at any time to pay for qualified medical expenses. Here’s what you need to know about investing in an HSA.

What is a health savings account (HSA)?

A health savings account, or HSA, is offered as part of a high-deductible health insurance plan (HDHP), that is, those that are higher than typical traditional insurance plans.

With an HDHP, typically, you pay a lower monthly premium, but you pay more healthcare costs yourself before the insurance benefits begin to pay their share, according to

The purpose of an HSA is to help pay for out-of-pocket medical expenses.

What are the triple tax benefits that come with an HSA?

Contributions to HSAs are tax-deductible, can be withdrawn tax-free at any time from qualified medical expenses, and can work as another retirement account, growing your savings tax-free. Plus, the money rolls over from year to year – you don’t have to use all the money you invest in any single year.

Using a HAS

Here’s what you need to know about eligibility, contributions, withdrawals, taxes, and penalties with a health savings account.


To be eligible for an HSA, the minimum deductible for a HDHP is $1,400 for an individual and $2,800 for a family, Bankrate reports.


In 2022, individuals can contribute up to $3650, and families can invest $7300.

Withdrawals, taxes and penalties

In many ways, an HSA can work like another retirement account, similar to a 401(k) or IRA.

You can withdraw the funds tax-free at any time you need to pay for qualified medical expenses, including deductibles, copayments, and other medical-related expenses.

If you are 65 or older, funds from your HSA can be withdrawn and used for any reason or expense.

However, prior to age 65, funds withdrawn for non-medical expenses are subject to a 20 percent penalty.

Making investments with an HSA

Even though the savings in an HSA can be invested, very few people actually do it. In 2020, only 9% of HSAs were invested, according to the Employee Benefits Research Institute report.

Once you meet the minimum investment threshold (no more than $2000), you can grow your money by investing the amount over the threshold.

However, one should factor in potential future medical needs and risk tolerance to determine how aggressively to allocate investments.

You can invest an HSA in funds, such as index funds or dividend funds, as well as individual stocks.

Those with a lower risk tolerance may want to consider money-market mutual funds or short-term bond funds.

Some HSA providers also offer a robo-advisor for help in selecting investments. Keep in mind there are fees for some advisors.