Can You Have Too Much Money In Your HSA?

June 13, 2023

Is it possible to have too much money in your HSA? In this highlight, we discuss what you should consider when contributing money to your HSA.

For more information, check out our free resources here.


Can you put too much in an HSA over time? Maxing it out and investing it over your entire career could be millions of dollars just for health expenses, right? Man, okay, I mean, I had to ask again. You’ve made the statement. What do you think? I don’t think you’re a real person, Mike. I’m gonna be honest. I think, Mike, you are one of my team members, one of my colleagues sitting over on the bench right now, making up a question and sending this out. Because we literally got into a heated, it was not heated, and heated, I mean, me and Brad almost came to fisticuffs. Okay, in this meeting, it was so heated about this idea of can you save too much in an HSA? And honestly, your pitch in that meeting for the HSA was good. I was pretty convinced. For me, right? It was very helpful. I understood a little bit better, so I think you should give it. Here’s what people think. Alright, I’m gonna max out my HSA. I just mentioned previously that in 2023, for family coverage, you do $7,750. So if I’m doing almost $8,000 a year, every year, in my HSA, and I invest it well and it grows, he’s right, it could be six figures, maybe even seven figures one day.

Well, what I would argue is, if you are able to invest those dollars, you’re probably one of the four percenters that is paying for your current medical expenses out of pocket, right? Well, if you’re doing that, what I’m going to encourage you to do is keep a spreadsheet. Every time you go to urgent care, I’m sorry, my from Urgent Care guy who said, “Don’t come to see me for a cold,” maybe you need some stitches, and you go to urgent care for that, right? You save that, and you know every time you go to a doctor visit, every time you have to get medication, you know, whatever the thing is, you just save your receipts.

Well, I’m convinced that if you accumulate receipts over your entire working career, and you have a spouse and kids, you’re going to save up some expenses. They’re going to build up. So, you do that. Well, a study just came out that said the average retiree (Daniel, if I get this number wrong, I want you to dub over my voice and make me say it right) spends $250,000 in retirement on medical expenses. A quarter of a million dollars dedicated solely and exclusively to medical expenses on average in retirement.

Well, I’m just thinking, if I’ve got $250,000 of medical expenses in retirement, and I’ve been accumulating all these medical expenses during my working years, I’m probably going to have hundreds of thousands of dollars that I can then reimburse to myself. So, yeah, maybe your HSA builds up and maybe it turns into a seven-figure account. I’m going to argue that of those seven figures, you’re probably going to be able to recoup hundreds of thousands of dollars back to yourself completely tax-free. Yeah, but let’s say I have $400,000 of expenses, but I have a million-dollar account. I still have $600,000 that’s sitting there.

Well, you know what happens after you turn age 65? Your HSA just turns into a regular IRA, just like your 401(k), where you pull money out and pay ordinary income tax. HSA works the exact same way. So, worst case, what you’ve done is you’ve given yourself another 401(k)-type.

Another IRA-type vehicle. So, because of that, I believe I’m gonna be able to use all my HSA dollars tax-free. I mean, my kids get bumps and bruises all over the place. I think I’m gonna be able to use all of them. But if not, at 65, I’m just gonna have some additional tax-deferred dollars that I’m gonna be able to play with. So, I am not really worried about overfunding my HSA.

The heated debate we got into when we did this was, “Well, how do you prioritize HSA over Roth?” Given that context, you don’t. You do both. You do both of them, right? You max out your HSA, you max out both your Roth and your HSA. That’s what me and my wife are doing so that we’re gonna have plenty of tax-free opportunities later in life to be able to capitalize on those investment vehicles.

Want to know what to do with your next dollar? You need this free download: the Financial Order of Operations. It’s our nine tried-and-true steps that will help you secure your financial future.



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