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A Health Savings Account (HSA) is a tax advantage savings account that is created for people who have high-deductible health insurance plans. High-deductible insurance plans are usually accompanied with lower premiums. Lower premiums mean the covered employee pays lower monthly fees, however the caveat is that the employee is responsible for the higher out-of-pocket medical expenses. Employer and employee can contribute to the HSA, which then the funds can be used towards qualified medical expenses. Some examples of qualified medical expenses include the following; dental and vision care, prescription and over-the-counter medications, childcare, transportation and parking expenses to and from medical appointments, and service animals.


The IRS allows a yearly max contribution to an HSA to be $3,650 for an individual or $7,300 for a family. If you are over 55 years of age, you are allotted an extra $1,000 per year. These limits include the contributions from both the employer and the employee.

Once you enroll in Medicare, you are no longer permitted to contribute to an HSA, however, you are still allowed to withdraw tax-free distributions from the existing account for qualified medical expenses.

Tax Benefit

People who participate in HSA’s benefit from a triple tax advantage:

  1. Contributions are tax-deductible up to the IRS limit. If payroll deduction is an option, these contributions are typically made pre-tax.

  2. Using HSA dollars to pay for qualified medical expenses is free from federal income taxes.

  3. When you start to invest your HSA dollars, any growth is free from Federal Income Taxes.

When to Invest

When looking at the past 30-year performance of the stock market, it’s important to consider when to start investing HSA funds. Since 1991, the stock market has been positive 83% of the time and negative 17% of the time. It would be detrimental for an individual to make withdraws from their invested portion when the market is down. This would result in negative compound interest. For this reason, we, at Whitaker-Myers Wealth Managers, recommend keeping the yearly maximum out-of-pocket coverage in cash within the HSA.

How to Invest

At Whitaker-Myers Wealth Managers, we keep your HSA diversified following Dave Ramseys’ principles; 25% Growth, 25% Growth & Income, 25% Aggressive Growth, and 25% International.

Pros of HSA

  • Contributions are payroll deducted and excluded from taxable income

  • Earnings on the account are tax-FREE (if used for qualified medical expenses)

  • Can invest money within the HSA into Mutual Funds

  • Contributions do not need to be used within the same year

  • HSA can be transferred to a surviving spouse tax-free upon the account holder’s death

Cons of HSA

  • Must have a high-deductible Insurance plan

  • Must have medical emergency fund to cover higher out of pocket medical expenses

  • Certain filing needs to be completed, which is where using a Tax ELP such as Whitaker- Myers, can help you prepare.


At Whitaker-Myers Wealth Managers, we typically recommend clients establish their Health Savings Account at Fidelity, since Schwab does not have a Health Savings Account option. We can help manage the Fidelity Health Savings Account through our Pontera platform.


March 17, 2022

Logan Doup

Whitaker-Myers Wealth Managers is an SEC-registered investment adviser firm.  The information presented is for educational purposes only and intended for a broad audience.  The information does not intend to make an offer or solicitation to sell or purchase any specific securities, investments, or investment strategies. Investments involve risk and are not guaranteed.  Whitaker-Myers Wealth Managers reasonably believes that this marketing does not include any false or misleading statements or omissions of facts regarding services, investment, or client experience. Whitaker-Myers Wealth Managers has a reasonable belief that the content will not cause an untrue or misleading implication regarding the adviser’s services, investments, or client experiences. Please refer to the firm’s ADV Part 2A for material risks disclosures.

Past performance of specific investment advice should not be relied upon without knowledge of certain circumstances of market events, the nature and timing of the investments, and relevant constraints of the investment. Whitaker-Myers Wealth Managers has presented information in a fair and balanced manner. 

Whitaker-Myers Wealth Managers is not giving tax, legal or accounting advice, consult a professional tax or legal representative if needed. 

Copyright (c) 2023 Clearnomics, Inc. and Whitaker-Myers Wealth Managers, LTD. All rights reserved. The information contained herein has been obtained from sources believed to be reliable, but is not necessarily complete and its accuracy cannot be guaranteed. No representation or warranty, express or implied, is made as to the fairness, accuracy, completeness, or correctness of the information and opinions contained herein. The views and the other information provided are subject to change without notice. All reports posted on or via or any affiliated websites, applications, or services are issued without regard to the specific investment objectives, financial situation, or particular needs of any specific recipient and are not to be construed as a solicitation or an offer to buy or sell any securities or related financial instruments. Past performance is not necessarily a guide to future results. Company fundamentals and earnings may be mentioned occasionally, but should not be construed as a recommendation to buy, sell, or hold the company's stock. Predictions, forecasts, and estimates for any and all markets should not be construed as recommendations to buy, sell, or hold any security--including mutual funds, futures contracts, and exchange traded funds, or any similar instruments. The text, images, and other materials contained or displayed in this report are proprietary to Clearnomics, Inc. and constitute valuable intellectual property. All unauthorized reproduction or other use of material from Clearnomics, Inc. shall be deemed willful infringement(s) of this copyright and other proprietary and intellectual property rights, including but not limited to, rights of privacy. Clearnomics, Inc. expressly reserves all rights in connection with its intellectual property, including without limitation the right to block the transfer of its products and services and/or to track usage thereof, through electronic tracking technology, and all other lawful means, now known or hereafter devised. Clearnomics, Inc. reserves the right, without further notice, to pursue to the fullest extent allowed by the law any and all criminal and civil remedies for the violation of its rights.

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