How to Build $1 Million in a Health Savings Account

Health savings accounts (HSAs) offer a unique opportunity for long-term wealth accumulation—potentially reaching $1 million by retirement—if managed strategically. By maximizing contributions, investing wisely, and allowing funds to grow tax-free over decades, some individuals can amass a sizable healthcare nest egg, according to a new analysis from the Employee Benefit Research Institute (EBRI).

The Power of an HSA’s Triple Tax Advantage

HSAs stand out among tax-advantaged accounts due to their triple tax benefits: contributions are made pre-tax, growth is tax-free, and withdrawals remain untaxed when used for qualified medical expenses. However, not everyone is eligible—these accounts are available only to those enrolled in high-deductible health plans (HDHPs).

For 2025, HDHPs must have a minimum deductible of $1,650 for individuals and $3,300 for families. The HSA contribution limits are set at $4,300 for individuals and $8,550 for families, with an additional $1,000 catch-up contribution allowed for those aged 55 and older. Unlike flexible spending accounts (FSAs), HSA balances roll over indefinitely and remain accessible even after changing jobs or retiring.

The $1 Million Projection—And Its Assumptions

EBRI’s analysis found that an individual who begins contributing the maximum amount at age 25, continues for 40 years, and invests those funds with an average 7.5% return could accumulate $1 million by retirement. Notably, this calculation excludes employer contributions, which could further enhance savings potential.

Despite the theoretical possibility, experts caution that most Americans use HSAs for their intended purpose—paying for current healthcare expenses—rather than as long-term investment vehicles.

Should You Use an HSA for Investing?

The idea of stockpiling HSA funds rather than spending them sparks debate. Andrea Ducas, vice president of health policy at the Center for American Progress, points out that the primary function of HSAs is to help individuals manage out-of-pocket medical costs associated with high-deductible plans.

“The only way you would be able to save an amount like a million dollars with an HSA is if you don’t use it, which is antithetical to the point,” Ducas told Yahoo Finance.

Moreover, many Americans lack the financial flexibility to fully fund an HSA each year. According to HSA advisory firm Devenir, the average HSA withdrawal in 2024 was approximately $1,300, illustrating that most account holders use their funds for immediate medical expenses rather than long-term growth.

Overcoming Common HSA Investment Pitfalls

One of the biggest barriers to maximizing an HSA’s potential is a lack of awareness about investment options. Devenir reports that only about 3.2 million HSAs have a portion of their funds invested, meaning most account holders keep their savings in cash—missing out on potential market gains.

Paul Fronstin, director of health benefits research at EBRI, stresses the importance of starting early. “If you begin at 46, you won’t come anywhere near the million-dollar mark,” he said. “You won’t even get halfway there.”

Still, even a more modest HSA balance can make a significant impact in retirement. EBRI estimates that a 65-year-old man enrolled in a Medigap plan will need around $184,000 to cover premiums and prescription drug costs, while a woman will require approximately $217,000. Couples could need upwards of $351,000—figures that highlight the importance of setting aside funds for healthcare in later years.

Maximizing Your HSA Contributions

While reaching $1 million may not be feasible for everyone, building a robust HSA balance can help offset medical costs in retirement. Contributions for 2024 can be made until the tax filing deadline on April 15, 2025, offering one last opportunity to maximize savings for the year.

As Fronstin puts it: “Even if you don’t make it to a million, building up an HSA account is certainly going to be helpful for covering healthcare expenses in retirement.”