How People Are Using Their HSA as a Secret Millionaire Retirement Account

Your employee benefits package likely includes a secret retirement account capable of growing to over a million dollars, completely tax-free. It’s the Health Savings Account (HSA). And most people use it wrong, treating it like a simple fund for medical bills.

A savvy few, however, use it as their most powerful wealth-building tool. They understand its unique triple-tax advantage and are quietly building seven-figure nest eggs.

This guide reveals their strategy, showing you how to transform your HSA from a misunderstood benefit into a cornerstone of your retirement plan.

Your HSA: The Secret Retirement Account You Already Have

Most people think a Health Savings Account (HSA) is just a simple “piggy bank” for doctor visits and prescriptions. They see it as a way to set aside a few hundred dollars for medical bills. This is a big mistake, and it’s why most people are missing out on a huge opportunity.

Some smart people know the truth. They use their HSA as their most powerful, secret retirement account. They know its special advantages and are using them to build a tax-free retirement fund worth millions. This guide will show you exactly how they do it. You’ll learn how to turn your HSA from a small medical fund into the main part of your plan to build wealth.

The results can be amazing. Think about this: if a family puts the maximum amount into their HSA each year and invests it. They could have over $1.9 million by age 65. This isn’t a trick. It’s just what happens when you save consistently and let your money grow for decades without taxes. The biggest thing holding people back isn’t money—it’s how they think about the account.

The name “Health Savings Account” makes you think it’s only for short-term health costs. In fact, about 88% of people with an HSA just leave their money in cash, earning almost nothing. The first step is to change how you see your HSA. It’s a secret millionaire retirement account hiding in plain sight.

Why the HSA Beats Every Other Retirement Account

The HSA is so powerful because of something no other account in the U.S. has: a triple-tax advantage. Other retirement accounts like a 401(k) or an IRA have tax benefits. But you always pay taxes at some point—either when you put money in or when you take it out. The HSA, when used correctly, gets rid of taxes completely.

The Three Big Tax Advantages

The “triple-tax advantage” means you get three powerful benefits that work together to make your money grow faster:

1. Your Contributions Are Tax-Deductible: The money you put into an HSA lowers your taxable income for the year. For example, if you make $100,000 and put $5,000 into your HSA, you only pay taxes on $95,000. This is like getting an instant return on your money. Even better, if you contribute through your paycheck at work. You also avoid Social Security and Medicare taxes (FICA taxes), which you can’t do with a 401(k) or IRA.
2. Your Money Grows Tax-Free: Once the money is in your HSA, you can invest it in things like stocks and mutual funds. All the growth—interest, dividends, and profits—is completely tax-free. In a normal investment account, you pay taxes on your gains. In an HSA. Your money can grow for decades without any tax drag.
3. Your Withdrawals for Medical Costs Are Tax-Free: You can take money out of your HSA at any age to pay for qualified medical costs, and you won’t pay any federal income tax. This includes things like deductibles, dental care, glasses, and prescriptions. This is the final piece that makes the HSA the only account that is never taxed when used for healthcare.

How the HSA Stacks Up

When you compare the HSA to other retirement accounts, it’s easy to see why it’s the best. It takes the best parts of both Traditional (pre-tax) and Roth (post-tax) accounts. You get the tax deduction upfront like a Traditional IRA, and you get tax-free withdrawals for medical costs like a Roth IRA. No other account does this.

Feature	Health Savings Account (HSA)	Roth IRA / 401(k)	Traditional IRA / 401(k)	Taxable Brokerage Account
Contribution Tax Treatment	Tax-Deductible (Pre-Tax)	Not Deductible (Post-Tax)	Tax-Deductible (Pre-Tax)	Not Deductible (Post-Tax)
FICA Tax Savings on Contribution?	Yes (via Payroll Deduction)	No	No	No
Investment Growth Tax Treatment	Tax-Free	Tax-Free	Tax-Deferred	Taxed
Withdrawal for Medical Costs	Tax-Free	Tax-Free (after 59.5 for earnings)	Taxed as Income	Taxed on Gains
Withdrawal (Non-Medical, After 65)	Taxed as Income	Tax-Free	Taxed as Income	Taxed on Gains

This table shows the HSA has two jobs. For healthcare, it works like a “super-Roth” because you never pay taxes. For anything else after age 65, it works like a “super-Traditional” account, just like a 401(k), but with one extra perk: you don’t have to take money out at a certain age. This flexibility makes it the clear winner.

Your 2025 Action Plan to Become an HSA Millionaire

Knowing the HSA is powerful is one thing. Using it is another. Here is a simple plan to get started in 2025 with the latest rules.

Step 1: See If You Can Get an HSA

You can only contribute to an HSA if you have a High-Deductible Health Plan (HDHP). Think of this as your ticket to get in. Choosing an HDHP isn’t just about health insurance; it’s a smart money move. You might have to pay more out-of-pocket for medical care. But that’s the trade-off for getting access to the best investment account there is.

If you’re pretty healthy and can afford the deductible, the long-term tax savings from the HSA are often worth much more than the risk of higher medical bills.

The IRS has specific rules for what counts as an HDHP. Here are the numbers for 2025 and 2026.

Year	Max You Can Put In (Single)	Max You Can Put In (Family)	Extra for Age 55+	Min. Deductible (Single)	Min. Deductible (Family)	Max. Out-of-Pocket (Single)	Max. Out-of-Pocket (Family)
2025	$4,300	$8,550	$1,000	$1,650	$3,300	$8,300	$16,600
2026	$4,400	$8,750	$1,000	$1,700	$3,400	$8,500	$17,000

Step 2: Put in the Maximum Amount

If you want to become a millionaire, you need to put in the most money you can each year. For 2025, that’s $4,300 for a single person and $8,550 for a family. If you’re 55 or older, you can add an extra $1,000. This “catch-up” contribution is a great way to save more as you get closer to retirement.

Step 3: Take the Free Money from Your Employer

Many companies that offer HDHPs also put money into their employees’ HSAs. The average amount is about $1,015 a year. This is free money. You should always take it. Just remember that your employer’s contribution counts toward your yearly limit. If your limit is $4,300 and your boss puts in $1,000, you can put in the other $3,300.

Step 4: Know Your Deadline

You have until the tax filing deadline (usually April 15th) of the next year to put money into your HSA for the current year. This means you have until April 15, 2026, to make your full 2025 contribution. This gives you extra time if you need it.

How to Grow Your HSA

The biggest mistake people make with their HSA is not investing the money. They treat it like a bank account and miss out on the power of tax-free growth. This is what will help your account grow to seven figures.

Don’t Treat Your HSA Like a Bank Account

As we said, almost 90% of HSA money is just sitting in cash. This stops the account from growing. It’s smart to keep some cash in your HSA to cover your yearly deductible, but you should invest the rest. If you don’t, you’ll never reach your goal.

How to Pick the Best HSA Provider

Not all HSA providers are the same. The one your job offers might have high fees and bad investment options. The good news is you can move your HSA money to a better company anytime you want. This is called a trustee-to-trustee transfer, and it’s tax-free.

The best providers for investors are big brokerage firms. Look for a provider that has:

• No monthly or yearly fees.
• No minimum amount of money needed to start investing.
• Lots of low-cost investment choices, like ETFs and index funds.

Here’s a look at some of the top providers for 2025.

Provider	Monthly/Annual Fee	Minimum to Invest	Investment Options	Robo-Advisor Option?
Fidelity	$0	$0	Full brokerage (stocks, bonds, ETFs, etc.)	Yes (Fidelity Go®)
Lively	$0 (for investing yourself)	$0	Brokerage via Charles Schwab	Yes (HSA Guided Portfolio)
HealthEquity	$0 (monthly fee)	$500	Limited Vanguard mutual funds	Yes (AutoPilot & GPS)

As you can see, a provider like Fidelity is a great choice because it has no fees, no investment minimums, and lets you invest in almost anything.

How to Build Your Million-Dollar Portfolio

If you have a long time before you retire, the best way to invest your HSA is simple: build a portfolio of low-cost funds and stick with it. This usually means putting most of your money in funds that track the whole stock and bond market. You can do this in a few ways:

• Do It Yourself: You pick and manage your own investments. This gives you the most control and is the cheapest option.
• Use a Robo-Advisor: An automated service builds and manages a portfolio for you based on your goals. It’s easy but usually has a small fee.
• Use a Managed Account: You get personal help from a financial advisor, but this usually costs more.

No matter which way you choose, the key is to be consistent, be patient when the market goes up and down, and check your investments once in a while to make sure they still fit your plan.

The Best HSA Trick: The “Shoebox” Strategy

There’s a powerful trick that makes the HSA even more flexible. It’s often called the “shoebox” strategy, and it uses a little-known IRS rule to your advantage.

The Idea: Pay Now, Get Paid Back Later

The IRS says you can pay yourself back for a medical expense from your HSA at any time. There’s no deadline. The only rule is that the expense had to happen after you opened your HSA. This lets you separate when you have a medical bill from when you take money out of your HSA.

How to Do It

The “shoebox” strategy is simple, but you have to be organized:

1. Pay with Your Own Money: When you have a medical bill, pay for it with your credit card or from your checking account. Don’t use your HSA money.
2. Save Your Receipts: Carefully save the receipt and any other paperwork. The best way is to scan them and save them in a folder on your computer or in the cloud. Keep a simple spreadsheet with the date, what it was for, and how much it cost.
3. Let Your HSA Grow: By paying for all your medical costs out-of-pocket, your entire HSA balance can stay invested and grow tax-free for years.

The Big Payoff: A Tax-Free Fund for Anything

After many years, you’ll have a large pile of receipts and a much larger HSA. For example, say over 25 years you paid $75,000 in medical bills out-of-pocket. During that same time, your HSA grew to $500,000. You can now take out up to $75,000 from your HSA, completely tax-free, for any reason you want. You’re just “paying yourself back” for those old receipts.

This changes what your HSA can do. It’s not just a retirement account anymore. It’s also a tax-free emergency fund, a way to pay for things if you retire early, or even a fund for a down payment on a house. No other account gives you this kind of freedom.

Next-Level Strategies

Once you’ve got the basics down, here are a few more advanced ways to get the most out of your HSA.

The One-Time IRA to HSA Rollover

The IRS lets you move money from a Traditional IRA to an HSA one time in your life. The amount you can move is limited to your yearly HSA contribution limit. This is a great way to fill up your HSA if you’re short on cash for the year. But there’s a catch: you have to stay in an HDHP for 12 months after you do it. If you don’t, you’ll have to pay taxes and a 10% penalty on the money you moved.

The Spousal Catch-Up Trick

If you and your spouse are both 55 or older, you can each add an extra $1,000 to an HSA. But you can’t put it in the same account. To do this, you each need to have your own separate HSA. This lets a couple save an extra $2,000 a year.

The “Adult Child” Loophole

Here’s a smart trick for families with adult children. If your child (between 19 and 25) is on your family HDHP but you don’t claim them as a dependent on your taxes, they can open their own HSA. And they can put in the full family maximum ($8,550 in 2025). You can even give them the money to do it. This means a family can put the family maximum in the parents’ HSA and another family maximum in the adult child’s HSA.

How to Use Your HSA in Retirement

After years of saving and investing, your HSA becomes a huge asset for retirement. Here’s how to use it.

Your Tax-Free Fund for Healthcare

The main job of your HSA in retirement is to pay for medical costs tax-free. This is a big deal because healthcare is one of the biggest expenses for retirees. A 65-year-old couple retiring today might need as much as $351,000 for healthcare in retirement. Your HSA is the best way to pay for these costs. You can use it for:

• Medicare Part B and Part D premiums.
• Deductibles and copayments.
• Dental, vision, and hearing care.
• Long-term care insurance premiums.

The HSA as a Secret IRA: Using it for Other Things After 65

When you turn 65, a big rule changes. You no longer have to pay the 20% penalty if you take money out for something other than medical costs. After 65, you can use your HSA money for anything—a vacation, a car, or just extra income. You’ll just have to pay regular income tax on it, just like a Traditional IRA or 401(k).

But the HSA still has an advantage: there are no Required Minimum Distributions (RMDs). This means you don’t have to take money out if you don’t need it, so it can keep growing tax-free.

What Happens to Your HSA When You Die

The last thing to think about is what happens to your HSA when you pass away. The rules are very different depending on who you leave it to.

• If You Leave It to Your Spouse: This is the best option. The HSA becomes your spouse’s HSA. All the tax benefits stay, and they can keep using it just like you did.
• If You Leave It to Someone Else (Like a Child): This is not so good. The account is no longer an HSA. The person who inherits it has to take all the money out, and it all becomes taxable income for them in that one year. This can create a big tax bill.

Because of this “tax bomb” for children or other heirs, you might want to change your strategy later in life. If you have a very large HSA, it might be smarter to start spending it down on your own medical and long-term care costs. This will lower the final balance and reduce the tax bill for the person who inherits it.

Final Thoughts

The Health Savings Account is much more than a way to pay for medical bills. It is the best tax-advantaged investment account you can get. Its triple-tax advantage—tax-deductible contributions, tax-free growth. And tax-free withdrawals—makes it better than a 401(k) or an IRA for building wealth.

The plan to turn your HSA into a million-dollar account is simple:

1. Get an HDHP to be able to open an HSA.
2. Put in the maximum amount every year.
3. Invest all of it in low-cost funds.
4. Don’t touch it. Pay for your current medical bills with other money and save your receipts.

If you do this, you can change your financial future. Your HSA will grow from a small savings tool into a powerful investment account, and then into a flexible fund for your retirement. It can be your tax-free money for healthcare, extra income like an IRA, and a tool to help your family. It’s time to stop ignoring your HSA and start using it as the secret weapon it is.