When you have a high-deductible health plan, out-of-pocket expenses are the norm. It's tough to predict when you will receive a bill and estimating the cost may feel impossible. Luckily, you may qualify for a health savings account, or HSA, to cut back on expenses.

HSAs are an excellent way to save on the short-term costs of healthcare. You can also invest the money to build a tax-free nest egg for retirement. It's not easy to decide between saving and investing. If you're struggling to make the choice for your family, here's what you need to know.

The tax benefits of a health savings account (HSA)

If you have a high-deductible health plan, it's worth the time to see if your plan qualifies for an HSA. These accounts are portable and the money is yours for life. HSAs are like the unicorn of the tax world—offering three different ways to save.

First, you can deposit money into your account before taxes. If you invest the money, your earnings grow tax-free. You can withdraw the money anytime, tax and penalty-free, for qualified medical expenses. You can find out what the IRS considers a “qualified medical expenses” here. If you're still not sure, don't be afraid to speak with a tax professional.

Should you keep your HSA money in cash?

If you're looking for flexibility, you may prefer to keep your HSA money in cash. With a high-deductible health plan, you may receive unexpected medical bills. By keeping your HSA money in cash, you can easily access it as needed. This could be handy if you are expecting a major medical expense—like surgery or another costly procedure.

The biggest downside of keeping your money in cash is the missed opportunity for growth. Your money could be earning interest, and by leaving it in cash, it may not keep pace with inflation. As the cost of living gets more expensive, your money’s purchasing power declines. The longer your money is stagnant, the more purchasing power you have to lose.

Should you invest your HSA money?

Are you hesitant to invest HSA money? You're far from alone. According to a recent report, 95 percent of HSA account holders keep their money in cash. While it's easy to see the appeal of the quick access to cash, you could be missing out on major growth potential.

With a few keystrokes on our Future Growth Calculator, you can see the power of investing over time. For example, if you start from scratch and contribute $3,500 every year, you may wind up with almost $200,000 after 30 years. This assumes you earn a four percent return on your money. This extra money could go a long way in paying for healthcare expenses in retirement.

Best of all, you can withdraw the money for qualified medical expenses without paying extra taxes or fees.

Think about the big picture

Before you decide to save or invest, think about your family's needs. Both your current and future money goals matter. It's tough to argue against investing, but you shouldn't bypass your other priorities to do it.

If you're struggling to make ends meet, it may be better to skip a high-deductible health plan for now. You won't qualify to contribute to an HSA, but it may be easier to plan for out-of-pocket medical expenses. If you are stuck with your company’s high-deductible plan, you may prefer to keep your HSA in cash for your family’s short-term needs.