November  2023

Maximixe your HSA e-Newsletter  Vol. 19, Issue 13

Up Your HSA Game With Three Wealth Maximizing Strategies


HSAs are a versatile tool for affordable healthcare, tax savings, and even  long-term wealth accumulation.

They offer three key tax benefits: tax-deductible contributions, tax-deferred growth, and tax-free withdrawals for qualified medical expenses.

Let’s explore these benefits and strategies for maximizing your HSA.

The Three Key HSA Tax Benefits

Tax-Deductible Contributions

  • Contributions are made with non-taxable dollars.
  • They can be made pre-tax through payroll deduction or fully tax-deductible, up to the annual limit.
  • HSA contributions are “above-the-line,” benefiting all qualifying individuals, whether or not they itemize deductions.

Tax-Deferred Growth

  • HSA funds can be invested in various financial instruments like stocks, bonds, mutual funds, or savings accounts.
  • Earnings and interest from these investments grow tax-deferred, allowing for faster growth compared to taxable accounts.

Tax-Free Withdrawals for Qualified Medical Expense

  • Withdrawals for qualified medical expenses are entirely tax-free.
  • This includes doctor visits, prescriptions, and a wide range of other medical services.
  • After age 65, funds can be withdrawn for any purpose without penalties, subject only to income tax.
  • No income limits or required minimum distributions on withdrawals.

Three HSA Strategies for Tax Savings and Growth

Strategy 1: Pay-As-You-Go: A Conservative Approach

  • Ideal for those unable to contribute the maximum HSA limit.
  • Contribute just what you need to pay current-year medical bills.
  • Deposits are tax-deductible, and withdrawals for reimbursed medical expenses are tax-free.
  • This approach turns out-of-pocket medical expenses into tax-efficient transactions.
  • It avoids investment risk, making the most of short-term tax advantages.
  • Example: If you have a $5,000 deductible and are in the 22% tax bracket, contributing to your HSA for deductible expenses saves you $1,410.26, avoiding income tax.

Strategy 2: A Balanced, Low-Risk Approach: Maximize Tax Advantages

  • Contribute up to the annual limit, maximizing short-term tax savings.
  • Keep HSA funds in an FDIC-guaranteed savings account, ensuring no market risk.
  • While returns may be modest, tax-deferred accumulation typically exceeds taxable accounts.

Strategy 3: Maximum Growth – Turn Your HSA Into a Strategic Retirement Asset

  • Ideal for those with a high risk tolerance and long-term focus.
  • Maximize annual contributions, up to $4,150 for individuals and $8,300 for families in 2024.
  • Leverage self-directed investing to diversify your HSA assets, potentially into stocks, bonds, and mutual funds. This approach requires an HSA custodian that supports self-directed investing.
  • While it carries investment risk, it offers the potential for higher returns.

How It Works: 

You contribute the maximum amount allowed each year, or as much as your budget allows.

You contract with a custodian or third-party administrator who supports self-directed investing. This allows you to invest your HSA assets in potentially higher-growth assets such as mutual funds, ETFs, and more – similar to an IRA.

These offer opportunities for faster growth, with all the tax advantages of an IRA, though you take on more potential risks.

Example: At age 65, the 20% penalty on non-qualified withdrawals disappears. Funds can be used for any purpose, subject to income tax.

Note: HSA funds can pay tax-free for long-term care insurance premiums in retirement, further incentivizing accumulation.

Flexibility and Future Access to HSA Funds

  • Save receipts and documentation for medical expenses paid with non-HSA funds.
  • Allow HSA investments to grow tax-deferred.
  • Reimburse yourself for these medical expenses when needed, possibly during market highs.
  • At any point, access your HSA funds tax-free by reimbursing yourself for qualified medical expenses, harnessing tax-deferred growth.

By contributing to your HSA based on your financial capacity and applying the right strategy, you can leverage the three tax benefits to minimize taxes, accumulate wealth, and ensure healthcare affordability now and in retirement.


HSAs are versatile financial tools that can adapt to your financial situation and goals. Whether you’re pursuing aggressive growth or looking for a practical approach to managing your healthcare costs, there’s an HSA strategy for you.

With these strategies, your HSA becomes a valuable asset that aligns with your unique financial circumstances and objectives, providing tax benefits and financial flexibility.

Click here to schedule an appointment, or call 800-913-0172 to get started.    

To your health and wealth,

Wiley Long Signature

Wiley P. Long, III
President - HSA for America

Wiley Long Portrait

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Wiley Long HSA for America President

Wiley Long is President of HSA for America. He believes that consumers should have choice and price transparency, so they can make the best healthcare decisions for their needs. Read more about Wiley on his Bio page.

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