6 Funds to Add to Your HSA
By Tony Dong | Originally posted on US News
As you put together your 2025 financial checklist, consider three important items: maximizing your 401(k) contributions to get the full employer match, contributing to a Roth IRA if eligible and checking whether you qualify for a health savings account (HSA).
Eligibility for an HSA depends on whether you're enrolled in a high-deductible health plan (HDHP). These plans come with lower monthly premiums but require you to pay a higher amount out of pocket before your coverage kicks in. For 2025, the IRS defines an HDHP as an insurance plan with a deductible of at least $1,650 for individuals or $3,300 for families.
If you're enrolled in an HDHP, you gain access to one of the most tax-efficient investment accounts available. "HSAs are popular investment vehicles for covering medical costs due in part to their triple tax advantage: Contributions are deductible, investment growth is tax-deferred and withdrawals are tax-free for qualified expenses," says Sabino Vargas, senior financial advisor at Vanguard.
When you contribute to an HSA, it reduces your taxable income, similar to a 401(k). For 2025, individuals can contribute up to $4,300, and families can contribute up to $8,550. Those age 55 or older can contribute an extra $1,000 as a catch-up, just like a Roth IRA allows for those 50 and older.
Once invested, all returns in an HSA, whether interest, dividends, or short- and long-term capital gains, grow tax-deferred within the account. And if HSA withdrawals are used for qualified medical expenses, they're completely tax-free.
These expenses include things like doctor visits, prescription medications, medical equipment such as blood pressure monitors, as well as dental work and vision care.
How you invest in an HSA depends on your health, timeline and fund options. If you expect to use it in the near future, more conservative investments may be suitable. If you're saving for medical expenses in retirement, growth-oriented funds might make more sense.