Elijah Nicholson-Messmer

Wed, Jun 18, 2025, 12:03 PM4 min read

Health savings accounts are a small but mighty tool when it comes to saving and investing money for retirement. Yet a vast majority of savers do not invest their HSA funds, according to a report from the Employee Benefit Research Institute.

The research, looking at more than 14.5 million HSA accounts, found that 85% of account holders do not invest their HSAs in assets other than cash. Financial advisors say that figure isn't surprising.

A combination of factors, including clunky investment platforms, balance thresholds and a general lack of understanding, all contribute to the high share of account holders who don't invest their HSA funds, advisors say.

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"Many companies require employees to utilize a captive custodian, and there is a lot of paperwork and separate accounts and then transfers required to begin the investment process," said Sammy Grant, principal at Homrich Berg in Sandy Springs, Georgia. "So, it's not a lack of interest or desire but a frustration with the hassle factor or a lack of investment options with the employer's chosen provider."

While rules vary, many HSA custodians also require a minimum balance, typically between $1,000 and $2,000, before allowing account holders to access investment options. This requirement effectively excludes most HSA users from investing, as 51% of accounts hold less than $1,000, according to the EBRI.

The institute's research indicates that employer contributions could play a role in boosting HSA investment. Accounts with invested assets saw a higher average employer contribution of $1,041, in contrast to accounts without invested assets, which averaged $694 in employer contributions.

"This result suggests that having an employer contribution could make account holders feel more comfortable investing at least some portion of their HSAs or that account owners with higher balances are more engaged because they have more at stake," EBRI researchers Jake Spiegel and Paul Fronstin wrote. "This could also indicate that these employers are more engaged with helping employees see the value of using HSAs as longer-term savings vehicles."

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Data shows that accounts with invested assets had an average balance of $23,583, more than sevenfold the $2,795 average for accounts without invested assets. Researchers say that difference is likely driven by a variety of factors, including the worker's ability to contribute and save more of their income.