People Are Treating This Retirement Tool Like an ATM

Many people are treating Health Savings Accounts (HSAs) like an ATM, according to a recent survey by the Plan Sponsor Council of America. While enrollment in HSAs has increased, only a small percentage of contributors are investing their contributions, missing out on the potential for tax-free growth. HSAs offer a triple tax benefit: contributions are tax-deductible, funds can grow tax-free, and withdrawals for qualifying medical expenses are tax-free.

However, employees are often only using a third of this potential. Experts suggest that people should invest their HSA contributions and maintain purchasing power for future medical expenses, which are expected to increase above general inflation.