HSAs are in a unique category. They are very similar to the 401(k) or IRA. You can save your money tax-free and let it grow, tax-free.

But unlike a 401(k) or IRA, you can access that money before retirement without penalty. You can use your tax-free contributions for qualified out-of-pocket medical expenses today.

You are faced with a tough decision, save for tomorrow or spend today. Before we look at how these strategies might fit your lifestyle, let’s review the current HSA market conditions.

HSA Spending vs. Investing

In 2017, HSA accounts holders spent over $22.5 billion dollars on presumed qualified out-of-pocket medical expenses. In fact, only 18% of all HSA assets are in investments as of December 31, 2017.

As you can see the overwhelming majority of HSA users choose to spend their tax-free dollars each year. This isn’t a huge surprise as health insurance premiums and costs continue to rise.

HSA Spending (2017)

82% of all HSA funds were spent in 2017. Wow! These pre-tax funds helped Americans pay for out-of-pocket medical expenses. Fun fact, 86% of all HSA spending is with a debit card.

HSA Investments (2017)

In 2017, HSA investments assets grew by 53% and now total $8.3 billion. In addition, more HSA accounts were left unfunded in 2017 vs. 2016. The percentage of unfunded accounts dropped from 24% to 20%. This increases the opportunity for HSA spenders to become HSA investors in 2018. Little by little more American’s are investing more HSA dollars each year.

Should You Spend or Invest Your HSA?

This is entirely up to you! Use your HSA (and it’s full features of benefits) in the ways that work best for you. The benefits of an HSA create a unique opportunity to choose your own path in an otherwise stringent and restrictive healthcare space.

Data Source: 2017 Year-End Devenir HSA Research Report

If you need more help with health account decisions, check out our blog. We will make you a healthcare benefits expert in no time, without any extra work or effort on your end.