Summary

Health savings accounts (HSAs) are a useful way for people enrolled in HSA-eligible health plans to save for potentially large medical expenses in retirement. One wealth-maximizing strategy is for HSA accountholders to contribute as much as they can, forgo taking distributions by paying for medical expenses out of pocket, and invest their balances. However, this strategy may not be appropriate for all accountholders, particularly those who might be constrained by their cash flow. This week’s Fast Fact provides an analysis of the EBRI database, which includes over 14 million HSA accounts, and takes a look at the extent to which accountholders use their HSAs strictly as savings vehicles, strictly as spending vehicles, or somewhere in between.