Using Health Savings Accounts for Tax‑Deferred Growth

Health Savings Accounts (HSAs) give high-net-worth investors a smart way to grow money with unique tax advantages. HSAs aren’t just for covering medical bills. They can double as a long-term investment tool that works well alongside traditional retirement accounts. Ron McCoy encourages his clients to make the most of HSAs, using them to turn everyday healthcare costs into another path to building wealth.

Why HSAs are Valuable for Affluent Investors

HSAs stand out because they offer three layers of tax benefits:

• Contributions are tax-deductible, which lowers your taxable income right away.
• The money inside the account grows tax-free, which means more growth over time.
• Withdrawals for qualified medical expenses aren’t taxed at all.

For those in higher tax brackets, this triple advantage can lead to real tax savings and faster long-term growth.

Case Study: Leveraging HSA for Long-Term Wealth

Imagine a 40-year-old investor putting in the maximum each year ($4,150 for individuals or $8,300 for families in 2024), investing it in a balanced portfolio with a 7% annual return:

• After 25 years, the HSA could grow to around $547,000.
• Any withdrawals for medical expenses, including Medicare premiums and qualified long-term care insurance, are completely tax-free.

This example shows how HSAs can play a big role in building wealth and covering retirement healthcare costs.

Source: IRS Guidelines on Health Savings Accounts

Strategic Tips for Maximizing Your HSA

Ron suggests these practical steps to make your HSA work harder:

1. Maximize Annual Contributions

Put in the maximum amount allowed each year to get the full benefit. If you’re over 55, you can add an extra $1,000 each year to grow your account even more.

2. Invest HSA Funds Wisely

Don’t let your HSA sit in a basic savings account. Invest in a mix of mutual funds, ETFs, or index funds to make the most of your money and let your contributions grow over time.

3. Delay Withdrawals if Possible

If you can pay medical costs out of pocket, let your HSA keep growing. The longer you leave the money alone, the more you’ll have for future healthcare expenses, especially in retirement when those costs can add up.

Real-Life Example: Strategic HSA Management

Ron once helped a 50-year-old client who only kept her HSA in a regular savings account. He moved her funds into a growth-focused portfolio, and over 15 years, her balance jumped from $20,000 to almost $85,000—giving her a tax-free cushion for medical expenses in retirement.

Ron McCoy’s Approach

Ron believes HSAs should be a core part of an overall wealth plan. He encourages clients to think of their HSA as more than just a savings account. It’s a way to invest, save on taxes, and be ready for healthcare costs later in life. By treating HSAs as long-term investments, Ron helps clients stay financially secure and get the most out of their savings.