America’s best-kept retirement account isn’t a 401(k), an IRA, or a pension. In fact, it doesn’t even have the word “retirement” in it at all.

The Health Savings Account (HSA) is a unique, often-overlooked account that offers a rare triple-tax benefit: tax-deductible contributions, tax-deferred growth, and tax-free spending. With this, it’s no wonder the HSA is on the rise. But as always, there’s a catch.

Health S(ecret) Account: HSAs can be used to invest or save for “qualified medical expenses” — planned or unplanned. That means deductibles, medication, and treatments. However, to be eligible to contribute to an HSA, you have to be enrolled in a high-deductible health plan (HDHP). In 2023, about half of private-sector employees were eligible to sock money away in an HSA, but according to the Employee Benefit Research Institute, only ~13% of Americans actively did so.

• It’s not too late to catch up: You can make contributions to your HSA for 2024 until tax day, then turn your attention to 2025 — which boasts higher contribution limits.
• Plus, in 2025: Eligible HSA participants can put $4.3K into an HSA if they’re single or $8.55K for families. HSA users over 55 can make a $1K catch-up contribution.

Health-Wealth Speedrun

Contributing money to an HSA alone is one way that Americans avoid being taxed on health expenses for the year. However, the smart move is maxing out your HSA and forgetting about it ‘til you’re old and gray — taking advantage of the power of compound interest.

• Many HSA providers offer the ability to invest your HSA deposits in bonds and stocks for the long run, but only about 4% of HSA users actually do so.
• HSA administrator HealthEquity says that investing is growing, with the number of invested HSAs rising 24% year-over-year in their latest earnings report.

Where to get started: If you don’t know if you have an HDHP or want to learn more about starting an HSA, reach out to your company’s payroll department. Your company might offer its own HSA platform, but make sure to ask about fees or investment choices. In the event that your employer or insurer’s HSA offering doesn’t meet your needs, you can open your own account at a brokerage like Fidelity or a robo-advisor like HealthEquity.