--- title: This Common HSA Mistake Could Cost You Thousands of Dollars description: Most HSA holders aren't investing their funds, missing out on growth and tax perks. Here's how to maximize your health savings account. authors: - name: Pete Grieve role: Lead News Reporter url: https://money.com/author/pete-grieve/ bio: Pete Grieve is a personal finance reporter. In his time at Money, Pete has covered everything from car buying to credit cards to the housing market. education: University of Chicago, BA Political Science at_money_since: 2022 articles: 600 covers: - Investing - Banking - Business - Career Advice - Credit - Credit Cards - Debt - Economy and Politics - Education - Health and Wellness - Housing - Identity Theft - Insurance - Lifestyle - Loans - Mortgages - Personal Finance - Professional Services - Retirement - Shopping - Taxes social: - https://twitter.com/pete_grieve - https://linkedin.com/in/pete-grieve-b5aa02138 - https://www.facebook.com/petegrieve4 editors: - name: Katherine Peach role: Associate Editor url: https://money.com/author/katherine-peach/ bio: Katherine Peach is an associate editor with a focus on news and email at Money. She didn’t always intend to write about money. She’s a classically trained pianist who dreamed of becoming an archaeologist. However, in 2007 Katherine began working in financial publishing as an editor for Agora Inc. (Apparently, unearthing ideas about improving your personal finances isn’t such a bad career alternative!) Katherine’s writing and editing work has been featured in Investing Daily, Clever, Investor Junkie, The Palm Beach Letter, Truth & Plenty, Independence Monthly, NICHE, AmericanStyle, AntiqueWeek, Millennial Money, Money Done Right, TheStreet, Sure Dividend and many others. Katherine holds a Bachelor of Arts in Ancient Studies with concentrations in Archaeology and Ancient Languages and a minor in Literature from the University of Maryland, Baltimore County. She is a member of Phi Beta Kappa. education: University of Maryland, Baltimore County at_money_since: 2025 articles: 14 covers: - Investing - Banking - Career Advice - Credit - Credit Cards - Debt - Economy and Politics - Education - Federal Reserve Rate Cuts - Health and Wellness - Housing - Identity Theft - Insurance - Lifestyle - Loans - Mortgages - Personal Finance - Professional Services - Retirement - Shopping - Taxes published: '2025-06-17T16:02:13.000Z' modified: '2025-07-09T14:16:23.000Z' section: Investing tags: - News word_count: 608 canonical: https://money.com/hsa-investing-mistake-costing-savers-thousands/ type: NewsArticle source: structured-blocks --- > **Disclosure:** We research all brands listed and may earn a fee from our partners. Research and financial considerations may influence how brands are displayed. Not all brands are included. [Learn more](https://money.com/page/disclaimer/). ![A medication pill bottle is used as a savings bank in this conceptual illustration about Health Savings Accounts](https://img.money.com/2025/06/News-HSA-Big-Mistake.jpg?crop=0px%2C278px%2C2880px%2C1620px&quality=85) While [health savings accounts](https://money.com/what-is-a-health-savings-account/) have great potential to help Americans prepare for future health care expenses, a high percentage of account holders are not investing their HSA funds — and it's robbing some folks of thousands (or more) over time. HSA accounts, available as companion savings vehicles for people with high-deductible health plans, are widely used by Americans due primarily to their "[triple tax advantage](https://money.com/what-to-do-hsa-money/)." HSAs can be funded with pre-tax dollars through payroll deferrals or via tax-deductible deposits. Contributions grow tax-free, and qualified withdrawals are not taxed. This combination of tax advantages can make an HSA even more powerful than a [401(k)](https://money.com/401k-and-401k-rollover/) because withdrawals from those retirement accounts are usually taxed as income. However, the contribution limit on an HSA ($4,300 per year for an individual) is much lower. ## The right Tax Relief firm makes all the difference, especially if you owe over $10,000 in taxes. ### Get the tailored experience that you expect from the tax litigation professionals in your area. Click on your state to get started! [Get Started](https://money.com/pr/kc0833a52be9?ap_referrer=%2Fhsa-investing-mistake-costing-savers-thousands%2F) ## Don't forget to invest HSA funds Fewer than one in six account holders invest their HSA funds, according to a [new report](https://www.ebri.org/publications/research-publications/issue-briefs/content/health-savings-account-balances--contributions--distributions--and-other-vital-statistics--2023--evidence-from-the-ebri-hsa-database) from the Employee Benefit Research Institute, or EBRI, which analyzed a database of more than 14 million accounts. Why is the share so low? To start, some employers do not offer HSA investing features. But that's not the entirety of the problem. After all, more than 64% of a surveyed group of employers had HSA investment options in a 2024 [survey](https://www.psca.org/industry-content/surveys/hsa-survey/) by the Plan Sponsor Council of America. The EBRI report explains that "the ability to invest assets within the account" is "one of the largest advantages HSAs offer." That's why the institute is concerned that in 2023 "only 15% of account holders invested their HSAs in assets other than cash." The statistic could be an indication that a large swath of people aren't investing their HSA funds simply because they're not aware that they can do so. (Typically, [contributions can be invested](https://money.com/invest-hsa-contributions/) in mutual funds, brokerage accounts or certificates of deposit.) Other people likely know it's an option but are hesitant about subjecting their medical savings to market volatility. Anticipating near-term health expenses? That could be a decent rationale for keeping HSA money in cash. Still, investing *some* of your HSA funds in assets remains an option in these scenarios. "If account holders have a large enough buffer in liquid accounts to weather a large, unexpected health care expense, then they could be better off at retirement by investing some portion of their HSAs," the report said. ## How to use an HSA to save Even though the name "health savings account" implies you'd generally want to use your funds to pay for health expenses, that's not always the wisest move, according to the EBRI report. The data shows that many account holders are withdrawing funds to pay for medical expenses on an annual basis. Many of these people would be better off paying out-of-pocket, letting their HSA money continue to grow tax-free. That approach may sound counterintuitive to many people, so additional education about optimal HSA strategies is needed, the EBRI report said. For example, people may not know that once you reach age 65, non-medical withdrawals don't incur the 20% penalties. At that point, withdrawals are simply taxed as income. And unlike [flexible spending accounts](https://money.com/what-is-a-flexible-spending-account/) (FSAs), there's no annual deadline to use HSA dollars. It's also helpful that older account holders aren't required to take minimum distributions by the IRS, so it's up to you how to use your HSA money. Just keep in mind that to avoid penalties before age 65, funds must be used for qualifying medical or dental expenses including deductibles, copays, over-the-counter drugs and menstrual products. ### Rated A+ by the BBB ![Get Started](https://s3.consumersadvocate.org/prd/image/image/14979/medium_d9420f2c-6d0b-4726-b903-60fb37740830.png) Our Partner [Get Started](https://money.com/go/9003c4744207?bidid=4063596430&pmeta=p129-c739-u28541&ptid=665772718&ptoken=5ec69aa3410db425d1bcb60d325dd0d5) ### Over 15 years of Experience ![Get Started](https://s3.consumersadvocate.org/prd/image/image/36123/medium_d8e31451-10fb-4690-a053-85981545c371.webp) Our Partner [Get Started](https://money.com/go/bb9d8e3214c8?bidid=4063596437&pmeta=p129-c739-u28541&ptid=665772718&ptoken=d3bacd1a9e926ea72bf239c68d7be859) ### 12+ years of tax resolution experience ![Get Started](https://s3.consumersadvocate.org/prd/image/image/19221/medium_21c467f5-9614-45a6-a827-5c1698cf1de6.png) Our Partner [Get Started](https://money.com/go/32057801bcf6?bidid=4063596428&pmeta=p129-c739-u28541&ptid=665772718&ptoken=e4942d2f5de2795556df62f96eb8c68e) ### 21+ years in service ![Get Started](https://s3.consumersadvocate.org/prd/image/image/37015/medium_cb5bc133-3b62-412b-9420-e17d1c5aaa63.webp) Our Partner [Get Started](https://money.com/go/757e5c5dfcaf?bidid=4063596435&pmeta=p129-c739-u28541&ptid=665772718&ptoken=0cfcab1ea3565a86b17b947777732787) ### 24/7 Client Portal Access ![Get Started](https://s3.consumersadvocate.org/prd/image/image/38669/medium_134094f5-0d61-4290-98dd-6ea7bc5551c2.webp) Our Partner [Get Started](https://money.com/go/13bcf9ba4251?bidid=4063596433&pmeta=p129-c739-u28541&ptid=665772718&ptoken=a68cce919c316fc35a3b998f1b20360a) ![](https://s3.consumersadvocate.org/prd/image/image/14979/medium_d9420f2c-6d0b-4726-b903-60fb37740830.png) Owe over $10,000 in taxes? 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[Get Started](https://money.com/pr/l978cd9f37e2?ap_referrer=%2Fhsa-investing-mistake-costing-savers-thousands%2F) ```json { "@context": "https://schema.org", "@graph": [ { "@type": "BreadcrumbList", "@id": "https://money.com/hsa-investing-mistake-costing-savers-thousands/#breadcrumb", "itemListElement": [ { "@type": "ListItem", "position": 1, "name": "Home", "item": "https://money.com" }, { "@type": "ListItem", "position": 2, "name": "Investing", "item": "https://money.com/investing/" }, { "@type": "ListItem", "position": 3, "name": "News", "item": "https://money.com/tag/news/" }, { "@type": "ListItem", "position": 4, "name": "This Common HSA Mistake Could Cost You Thousands of Dollars" } ] }, { "@type": "WebSite", "@id": "https://money.com/#website", "url": "https://money.com", "name": "Money", "publisher": { "@id": "https://money.com/#organization" } }, { "@type": "WebPage", "@id": "https://money.com/hsa-investing-mistake-costing-savers-thousands/#webpage", "url": "https://money.com/hsa-investing-mistake-costing-savers-thousands/", "name": "This Common HSA Mistake Could Cost You Thousands of Dollars", "isPartOf": { "@id": "https://money.com/#website" }, "datePublished": "2025-06-17T16:02:13.000Z", "mainEntity": { "@id": "https://money.com/hsa-investing-mistake-costing-savers-thousands/" }, "inLanguage": "en-US", "breadcrumb": { "@id": "https://money.com/hsa-investing-mistake-costing-savers-thousands/#breadcrumb" }, "dateModified": "2025-07-09T14:16:23.000Z" }, { "@type": "NewsArticle", "headline": "This Common HSA Mistake Could Cost You Thousands of Dollars", "articleSection": "Investing", "image": [ { "@type": "ImageObject", "url": "https://img.money.com/2025/06/News-HSA-Big-Mistake.jpg?crop=0px%2C278px%2C2880px%2C1620px&quality=85", "width": 1012, "height": 569, "caption": "News-HSA-Big-Mistake" } ], "author": [ { "@type": "Person", "name": "Pete Grieve", "url": "https://money.com/author/pete-grieve/", "@id": "https://money.com/author/pete-grieve/#author", "description": "Pete Grieve is a personal finance reporter. 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