Case Study: How a 45-Employee Company Saved $150,000 Per Year by Leaving a PEO and Moving to a Level-Funded Health Plan

When most people think about retirement savings, they think about a 401(k) or an IRA. But one of the most powerful retirement tools available may already be sitting inside your health insurance plan.

A Health Savings Account (HSA) isn’t just a way to pay for doctor’s visits or prescriptions—it’s a tax-advantaged investment account that can grow for decades while giving you the flexibility to pay for future healthcare expenses.

If you’re enrolled in a qualified High Deductible Health Plan (HDHP), understanding how to maximize your HSA could add tens—or even hundreds—of thousands of dollars to your retirement savings.

The Feature That Makes HSAs Different

Unlike Flexible Spending Accounts (FSAs), HSAs never expire.

Every dollar you don’t spend simply stays in your account.

That means:

• You don’t lose unused funds at year-end. 
• You don’t have to spend money just because the calendar is ending. 
• Your balance continues growing year after year. 

Whether you contribute $500 or $50,000 over many years, 100% of the unused balance belongs to you.

Even if you:

• Change employers 
• Retire 
• Leave your health plan 
• Move to another state 

Your HSA goes with you.

Think of Your HSA as Another Retirement Account

Many people make the mistake of using their HSA like a checking account.

A better strategy is often to:

1. Contribute to your HSA each year. 
2. Pay smaller medical expenses out-of-pocket if you can comfortably afford to. 
3. Leave your HSA invested so it has decades to grow. 

Why?

Because HSAs offer what many financial professionals call a “triple tax advantage.”

Contributions are tax-free.

Money contributed through payroll generally avoids:

• Federal income tax 
• State income tax (in most states) 
• Social Security and Medicare taxes 

Growth is tax-free.

Interest, dividends, and investment gains grow without current taxation.

Qualified withdrawals are tax-free.

When used for eligible medical expenses, withdrawals aren’t taxed.

Few accounts receive all three of these tax advantages.

Invest Your HSA Like Your 401(k)

Many HSA providers allow you to invest your balance once you’ve accumulated a minimum amount in cash.

Instead of leaving all of your money in a savings account earning modest interest, you may be able to invest in:

• Mutual funds 
• Index funds 
• ETFs 
• Other diversified investment options 

If retirement is still 20 or 30 years away, that additional growth can make an enormous difference.

For many people, their HSA becomes another long-term investment account alongside their:

• 401(k) 
• Roth IRA 
• Traditional IRA 
• Brokerage account 

A Simple Example

Imagine someone contributes $5,000 annually to an HSA for 25 years and invests those funds, earning an average annual return of 7%.

They could accumulate well over $300,000 for future healthcare expenses in retirement.

The earlier contributions begin, the more time compound growth has to work.

Healthcare Costs Don’t Stop in Retirement

Many retirees underestimate how much they’ll spend on healthcare.

Future expenses may include:

• Medicare premiums 
• Deductibles 
• Prescription medications 
• Dental care 
• Vision care 
• Hearing aids 
• Long-term medical needs 

Having a dedicated, tax-advantaged account available to help cover those costs can reduce pressure on your other retirement assets.

A Few Important Rules

To contribute to an HSA, you generally must:

• Be enrolled in an HSA-qualified High Deductible Health Plan (HDHP). 
• Have no disqualifying non-HDHP coverage. 
• Not be enrolled in Medicare. 
• Not be claimed as someone else’s tax dependent. 

Contribution limits are updated annually by the IRS, so it’s important to review the current limits each year.

How Employers Can Help

Employers can make HSAs significantly more valuable by:

• Offering employer HSA contributions. 
• Educating employees on long-term investing—not just spending. 
• Selecting HSA administrators with strong, low-cost investment options. 
• Encouraging employees to view HSAs as part of their overall retirement strategy. 

Many employees simply aren’t aware that their HSA can become one of the most tax-efficient retirement savings vehicles available.

The Bottom Line

An HSA is much more than a medical spending account.

When used strategically, it can become one of the most valuable pieces of your retirement plan.

The key advantages are simple:

• Unused funds roll over every year—there is no “use it or lose it” rule. 
• The account belongs to you, even if you change jobs. 
• Your balance can be invested for long-term growth. 
• Qualified medical withdrawals remain tax-free. 
• Over time, an HSA can become a substantial source of tax-efficient retirement savings. 

If you’re eligible for an HSA, consider treating it like an investment account first and a spending account second. Your future self may thank you.

Need Help Determining if an HSA Is Right for Your Organization?

Choosing between traditional health plans and HSA-qualified options involves more than comparing premiums. The BRIC Agency helps employers evaluate plan designs, educate employees on maximizing HSA benefits, and develop strategies that balance affordability with long-term financial wellness.

Contact The BRIC Agency to learn how an HSA strategy can benefit both your organization and your employees.