InvestED | Tax-Free for Life

The HSA Strategy Affluent Retirees With They Started Sooner

For high-net-worth individuals, an HSA can be more than a place to pay today’s medical bills — it can act as a health-care retirement account, offering long-term tax savings and a dedicated pool for future medical costs.

The Triple-Tax Advantage

HSAs offer one of the strongest tax combinations available:

1. Pre-tax contributions from payroll deduction that lower taxable income

2. Tax-free investment growth

3. Tax-free withdrawals for qualified medical expenses — even years later

Grow It Like a Retirement Account

Investing most of the HSA — similar to an IRA or 401(k) — lets balances compound for decades.
Rose Street Advisors encourages keeping a money-market cash buffer inside the HSA, covering an unexpectedly expensive medical year while leaving the rest invested for growth.

Keep Receipts & Reimburse in Retirement

A powerful strategy is to pay out-of-pocket even using a credit card to get the miles/points/cash back.

Store every receipt in a digital vault, and reimburse yourself later in retirement. This keeps more dollars invested and growing tax-free while maintaining flexibility for future withdrawals.

Healthcare Costs Are Higher Than People Think

A healthy 65-year-old couple may need about $388,000 for healthcare costs in retirement under Medicare + Medigap Plan G + Part D (Milliman Retiree Health Cost Index, 2025). This excludes long-term care, making proactive planning essential.

Best Practices

1. Max out annual contributions (use catch-ups if eligible) through payroll deduction.

2. Invest HSA funds for long-term growth.

3. (Optional) Keep a money-market buffer inside the HSA in the event you need to use the funds for a costly medical year.

4. Pay expenses out-of-pocket when possible and even use a credit card that earn points/miles/cash back (and pay it off each month).

5. Store receipts in a digital vault for future tax-free reimbursements.

6. When in retirement, reimburse yourself for the total of your receipts to maximize compounding.

7. Then, treat the HSA as a health-care retirement account paying for medical expenses with pre-tax dollars in retirement.

Used strategically as a part of your overall financial life plan, an HSA becomes a tax-efficient engine for future healthcare expenses — protecting and growing wealth while working and giving retirees flexibility and long-term control.

Jeremy Heavey

AIF ® , NSSA ® | FINANCIAL ADVISOR

Securities and Investment Advisory Services offered through M Holdings Securities, Inc., a Registered Broker/Dealer and Investment Advisor, Member FINRA/SIPC. Rose Street Advisors, LLC is independently owned and operated. File #5052118