HSAs are Evolving: Here’s What to Know Beyond the Basics

By Brian Hutchin | Originally posted on 401K Specialist

Brian Hutchin explains how health savings accounts can be used much more broadly than for immediate personal healthcare needs

Medical care is very personal, and so are the expenses that go along with it. Many eligible individuals choose to manage their medical care costs with a health savings account (HSA).

According to the Consumer Financial Protection Bureau, there were approximately 36 million HSAs active in 2023, and these accounts collectively held more than $116 billion in assets, an increase of more than 500% since 2013. This spike is no surprise as medical costs continue to rise and as the benefits of HSAs are becoming better understood.

In spite of this rapid growth, it may come as a surprise to many HSA accountholders that HSA funds can be used more broadly than immediate personal healthcare needs—allowing the HSA to play an expanded role in a person’s overall financial plan. As HSA use has increased in the more than 20 years since they were established, we see a need to manage these accounts similar to how we manage other long-term financial tools. For example, in some circumstances, an HSA can cover medical costs for a spouse, child, and dependents, and in other situations, such as death or divorce, accountholders need to evaluate how the funds may be transferred.

Beyond a fundamental understanding of what an HSA can do, it’s also critical to be informed of their full scope and how they need to be managed over time.