A 2026 Guide to HSA Investments

A health savings account (HSA) provides a tax-advantaged way to grow funds for future medical expenses. The funds can be contributed tax-free with tax-free growth and can be withdrawn tax-free for qualified medical expenses. Understanding how to maximize your HSA investments is more crucial than ever. HSAs are not just about saving for medical expenses; they also provide a unique avenue for tax-advantaged growth, making them an attractive option for savvy investors. With the ability to invest in a variety of assets, from mutual funds to stocks, HSAs can significantly enhance your financial strategy.

If you want a more personalized look at HSA investments for your financial future, we can connect you with a financial advisor who can help.

What’s the Right Approach for HSA Investments?

Unlike traditional savings accounts, a health savings account (HSA) provides a triple tax advantage: contributions are tax-deductible, earnings grow tax-free, and withdrawals for qualified medical expenses are tax-free. This is why an HSA makes sense for those looking to maximize their savings and investment potential.

However, to fully benefit from an HSA, it’s crucial to understand the right approach to investing within this account, along with its pros and cons.

1. Managed Approach

In some cases, a managed approach is the right move.

With a managed HSA, your HSA provider will consider your investment preferences when building your portfolio for you. Expect to answer some questions about your financial goals and risk tolerance when opening your HSA with your provider.

A managed HSA is the right approach for someone who wants a tax-advantaged way to build an investment portfolio in their HSA but doesn’t have the time or ability to do it themselves.

Beyond building an investment portfolio, a managed HSA option often handles rebalancing for you. Since this is a critical part of a long-term investment plan, you can breathe easy knowing that your HSA provider is managing your asset allocation within your preferred levels.

With the potential for higher returns, this type of HSAenables professional risk management. However, this can come with higher fees or the risk of falling behind the market.

2. Self-Guided Approach

If a managed approach isn’t your style, consider a self-guided approach.

In this case, you have the flexibility to choose individual investments for your portfolio, including these popular options.

A self-directed approach puts more responsibility on your shoulders, but if you feel up to the challenge, a self-directed HSA could be beneficial. It provides the flexibility to choose individual investments, giving you complete control over your investment choices.

However, this requires more time to manage the process and holds you directly responsible for any gains or losses.

3. Robo-Advisor Approach

Some robo-advisors can digitally manage your investment portfolio within an HSA.

A robo-advisor handles all the investment details for you, using automation to manage your portfolio. Since there is no human component, this option is typically more affordable for those seeking a managed portfolio approach.

In addition to their lower costs, robo-advisors allow you to put your portfolio on autopilot. However, there is a lack of personalization when saving for specific goals, and you have no emotional support for the ups and downs of the market.

Tips to Stay on Track With HSA Investments

When selecting your HSA investment strategy, there are some tips you can implement to stay on track.

Choose the Right Approach

The first step to building a portfolio is to consider how much time you have to dedicate to your HSA investment portfolio. That will help you choose between a self-directed or managed HSA approach. The right choice will ultimately depend on your unique time restraints and skill set.

Make Regular Contributions

A key part of making the most of an HSA is to contribute as much as possible.

As of 2026, the contribution limit for an individual account is $4,400 or $8,750 for a family account. However, if you are over 55, you can contribute an additional $1,000 to your health savings account.

While you may not be able to make the maximum contribution, it can pay off in the long run when you make your HSA contributions a priority in your budget.

Consider a Rollover

If you have funds in an individual retirement account (IRA), you can roll the funds into your HSA.

Although this is allowed, the amount rolled over will count against your contribution limit for the year. For example, let’s say that you roll over $2,000 from your IRA into your HSA in 2026. With that, you’d only be able to contribute $2,400 more for 2026.

It’s important to complete this rollover correctly, or you could face negative tax implications.

Don’t Forget to Rebalance

Your asset allocation represents the mix of investments in your portfolio and reflects your risk tolerance, timeline and goals. However, this will change as you approach retirement.

Although you may initially set up your portfolio with the correct asset allocation, unbalanced growth across asset classes may require an occasional rebalance, so it’s important to incorporate regular rebalancing into your investment strategy.

Leverage the HSA’s Tax Efficiency

The triple tax advantages of an HSA are certainly more advantageous than investing through a taxable brokerage account.

For example, in a taxable account, you might need to consider tax-free securities like municipal bonds and iBonds for the fixed-income portion of your portfolio to boost tax efficiency. However, investing with an HSA could provide more choices of securities because it doesn’t share the same worries about possible tax consequences as a taxable account.

When Does It Make Sense to Invest in an HSA or Keep Cash?

Deciding whether to invest HSA funds or keep them in cash largely depends on how soon you expect to use the money.

If you anticipate near-term medical expenses, keeping a portion of your HSA balance in cash can help cover costs without having to sell investments at an unfavorable time. This approach prioritizes liquidity and stability over potential growth.

For those with few expected medical expenses and sufficient non-HSA savings to cover out-of-pocket costs, investing HSA funds may be more practical. Keeping the balance invested over a longer period can support tax-advantaged growth, particularly if the funds are intended for future retirement healthcare expenses.

Many HSA providers have specific requirements, such as a minimum cash balance before allowing investments. Even when investing is available, some account holders choose to maintain a cash reserve equal to one year of anticipated medical expenses. This can reduce the need to liquidate investments during market downturns.

The decision is not permanent and can change over time. As healthcare needs, income or account balances shift, adjusting the mix between cash and invested funds can help align the HSA with current priorities while still preserving flexibility.

Bottom Line

A bottle of medicine and a stack of cash.

The nuances of HSA investments become increasingly crucial for maximizing your healthcare savings. Health savings accounts offer a unique trifecta of tax advantages: contributions are tax-deductible and growth is tax-free with tax-free withdrawals for qualified medical expenses. This makes them an attractive option for savvy investors aiming to bolster their financial health.

Tips on HSA Investments

Choosing the right mix of HSA investments is easier said than done. A financial advisor can help you choose the right investments for your financial goals. Finding a financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with vetted financial advisors who serve your area, and you can have a free introductory call with your advisor matches to decide which one you feel is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.
Need help visualizing your asset allocation with your risk tolerance? Check out our asset allocation calculator.