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PSA on Health Savings Accounts

PSA on Health Savings Accounts

| May 15, 2018

I'm seeing an alarming number of people not utilizing their health savings accounts effectively. 

If you have the means to pay for medical expenses out of pocket, using your health savings account as an investment account is a brilliant way to maximize the utility of the tax code.  After all, it’s the only kind of investment account where contributions are deductible, and withdrawals are tax-free.  It’s like a Roth IRA but with the benefits of a regular tax-deductible IRA too, so have your cake and eat it too!

However, the default option is going to be something like cash or something that'll pay you almost nothing. 

If you're going to follow the strategy to use your health savings account to fund your future healthcare needs in retirement, and not actually pay out of the account for day to day medical expenses, you probably want to get those funds invested in the stock market. 

Usually, if people are willing to take the risk, it's generally a small amount of your overall assets.  Because of the tax nature of the account, I often suggest a very high stock allocation. 

If you'd like help figuring out where to invest those funds, or if you're having trouble with the website (a lot of them are very new and not very user-friendly), please give us a call or send us an email. 

We are happy to help!

Tom Gartner, MSAPM, CFP®


This article represents opinions of the authors and not those of their firm and are subject to change from time to time, and do not constitute a recommendation to purchase and sale any security nor to engage in any particular investment or legal strategy. The information contained here has been obtained from sources believed to be reliable but cannot be guaranteed for accuracy.