If I had to pick one account type to prioritize above everything else — above a 401(k), above a Roth IRA, above a taxable brokerage — I'd pick the HSA without much hesitation. It's not even a close call for me. The Health Savings Account is genuinely the most powerful savings vehicle available to everyday Americans, and most people either don't have access to one, don't understand what it can do, or are using it wrong.
Let me explain why I feel so strongly about this.
It's the Only Triple Tax-Advantaged Account in Existence
Every other account gets you one or two tax benefits. A traditional 401(k) gives you a tax deduction on contributions now, but you pay taxes on the way out. A Roth IRA flips that — you contribute after-tax dollars but the growth and withdrawals are tax-free. Both are great. Neither touches the HSA.
The HSA is the only account that gives you all three:
Your contributions go in pre-tax — if you contribute through payroll, you avoid federal income tax, state income tax (in most states), and FICA taxes. That last one matters more than people realize. Roth and traditional IRAs don't save you FICA. The HSA does.
The money grows tax-free inside the account. No taxes on dividends, no taxes on capital gains, no annual drag from a tax bill.
Qualified withdrawals for medical expenses are completely tax-free. You never pay taxes on that money — not when it goes in, not while it grows, not when it comes out for a qualified expense.
That triple advantage doesn't exist anywhere else in the U.S. tax code. When you understand what that actually means over 20 or 30 years of compounding, it's hard to look at this account the same way again.
You Can Use It Now or Let It Grow — Your Choice
One of the things that makes the HSA so flexible is that it doesn't force your hand. You're not locked into a specific timeline the way you are with retirement accounts.
If you have a medical expense today, you can use the HSA funds to cover it, tax-free, right now. That's the straightforward use case most people are familiar with. But here's where it gets interesting — you don't have to do that.
You can pay for medical expenses out of pocket today, let the HSA money sit and grow completely untouched, and then decades later pull that money out tax-free. As long as the expense was a legitimate qualified medical expense that occurred after you opened the account, there is no time limit on reimbursing yourself. I'll come back to that in a minute because it's one of the most underused features of this account.
The point is that the HSA gives you options that other accounts don't. It works as a short-term medical fund if you need it to, and it works as a long-term wealth-building account if you don't.
If You're Not Investing the Money, You're Doing It Wrong
This is where a lot of people go wrong with HSAs, and I'll be direct about it: if your HSA balance is just sitting in cash, you're wasting the most powerful feature of the account.
Most HSA providers let you invest your balance once it crosses a certain threshold — sometimes $500, sometimes $1,000, depending on where your account is held. Once you hit that threshold, you should be moving the money into investments. Low-cost index funds, same as you'd use anywhere else.
The math on this is significant. Money sitting in an HSA cash account earning 0.01% interest is not doing anything for you. That same money invested in a broad index fund over 20 or 30 years looks completely different. And because all of that growth is tax-free, you're compounding on a tax basis that doesn't exist in any other account.
The HSA is not a checking account for medical expenses. It's an investment account with tax advantages that no other account can match. Treat it that way.
How I Use Mine
Personally, I keep my HSA at Fidelity. I moved it there specifically because Fidelity offers a self-directed HSA with no account fees and access to their full range of index funds. There's no minimum balance required before you can invest, which removes one of the common friction points with other providers.
My investment approach in the HSA is identical to what I do across all my other retirement accounts — a simple, low-cost index fund strategy. I'm not doing anything creative or complicated. The same philosophy that drives the rest of my investing drives this account. Keep it simple, keep costs low, and let compounding do the work.
If your employer-sponsored HSA has poor investment options or high fees, it's worth knowing that in most cases you can transfer your balance to a provider of your choice. You're not necessarily stuck with whoever your employer selected.
The Reimbursement Strategy — One of the Best Kept Secrets in Personal Finance
Here's the feature I mentioned earlier that almost nobody talks about, and it's genuinely one of the most powerful things about this account.
There is no deadline on reimbursing yourself for qualified medical expenses from an HSA. As long as the expense was incurred after your HSA was opened, you can reimburse yourself for it years or even decades later.
What this means in practice: every time you pay a medical expense out of pocket today, keep the receipt. Log it somewhere. Then let that money stay invested in your HSA and keep growing. In retirement — or whenever you want — you can pull that money out completely tax-free as reimbursement for expenses you already paid years ago.
Think about what that is. It's a way to create a pool of tax-free money you can access at any time, for any reason, as long as you've accumulated enough qualifying receipts to justify the withdrawal. People who are disciplined about this effectively turn their HSA into a flexible tax-free account that rivals a Roth in terms of utility.
I keep a folder — digital, organized by year — of every medical expense I've paid out of pocket since opening my HSA. Each one of those receipts represents tax-free money I can pull out someday when I want it.
The One Catch
You can only contribute to an HSA if you're enrolled in a High Deductible Health Plan (HDHP). That's the gating requirement, and it's not right for everyone. If you have chronic health conditions or high ongoing medical expenses, an HDHP might cost you more than it saves. Do the math for your specific situation.
But if you're generally healthy, if your employer offers an HDHP option, and you have the financial cushion to handle the higher deductible when it comes up — the HSA is, in my opinion, the best account available to you. Max it out before you think about anything else.
The contribution limits aren't enormous — but whatever you can put in, invest it, leave it alone, and save every receipt. Future you will be grateful.
Disclosure: This article is for informational purposes only and is not financial advice. We are not licensed financial advisors. Tax laws are subject to change and vary by state. Consult a licensed tax professional or financial advisor for guidance specific to your situation.