What is an HSA and Its Benefits?

A Health Savings Account (HSA) is not just a tool for covering medical expenses; it’s also an incredibly powerful investment vehicle when used correctly. HSAs offer a triple tax advantage that makes them one of the most effective ways to build long-term wealth.

Here’s how it works:

1. Pre-tax contributions – Any money you put into your HSA comes straight from your paycheck before taxes are taken out. This immediately reduces your taxable income.
2. Tax-free growth – Unlike most traditional investment accounts, the money you invest in an HSA grows tax-free, whether it’s through interest, dividends, or capital gains.
3. Tax-free withdrawals – As long as the money is used for qualified medical expenses, you never pay taxes on your withdrawals.

This unique combination makes the HSA a "health investment account" not just a savings account. You can maximize its benefits by treating it like a retirement account, allowing your contributions to grow and compound over time. Instead of withdrawing funds for immediate medical expenses, consider paying out-of-pocket where possible, allowing your HSA investments to continue growing.

For example, if you pay $300 out-of-pocket for a medical bill today, that same $300 left to grow in your HSA could be worth over $2,100 in 30 years, assuming a 7% annual return. It’s a long-term strategy that transforms an everyday expense into a future investment opportunity.

For 2025, HSA contribution limits are set at $4,150 for individuals and $8,300 for families. And if you're 55 or older, you can contribute an additional $1,000 per year.

How HSAs Allow You to Invest in Bitcoin

While most people think of HSAs as a simple savings tool for healthcare expenses, they can also be used to invest. The key is choosing an HSA custodian that allows for alternative investments, like Bitcoin. Here’s how it works:

1. Choose an HSA Custodian that Allows Alternative Investments – Many custodians only offer traditional investment options like stocks and bonds. But if you select a custodian that permits alternative investments, you can use your HSA to buy Bitcoin.
2. Invest in Bitcoin – Once you’ve set up your HSA with a compatible custodian, you can use your HSA funds to purchase Bitcoin. This gives you the flexibility to take advantage of Bitcoin’s potential for growth while keeping it within the tax-advantaged structure of your HSA.
3. Self-Custody Your Bitcoin – After purchasing Bitcoin, it’s crucial to hold it securely in self-custody. This ensures you maintain full control of your Bitcoin, following the best practices for security and long-term storage. At The Bitcoin Adviser, we always emphasize the importance of self-custody because if you don’t hold your keys, you don’t hold your Bitcoin.

By investing your HSA funds in Bitcoin, you combine the tax advantages of the HSA with the growth potential of Bitcoin, making it a powerful strategy for long-term wealth building.

How The Bitcoin Adviser Can Help?

Navigating the complexities of self-custody and alternative investments in an HSA can feel overwhelming, but you don’t have to go it alone. The Bitcoin Adviser specializes in helping individuals securely hold Bitcoin, even within tax-advantaged accounts like HSAs. We’ll guide you through the entire process, ensuring that you can confidently invest in Bitcoin while keeping your assets safe.

If you want to learn more and discuss how the Bitcoin Adviser can help you with bitcoin and your HSA please book a time with Scott:

Disclaimer: The information provided above is for educational purposes only and does not constitute financial or investment advice. The Bitcoin Adviser does not offer tax or legal advice, and you should consult with a qualified professional before making any financial decisions regarding your Health Savings Account (HSA) or Bitcoin investments. The strategies discussed may not be suitable for your individual circumstances.