According to a recent survey conducted by the Plan Sponsor Council of America (PSCA), the majority of health savings account (HSA) holders are missing out on the potential investment benefits offered by these accounts. The survey found that only 19% of HSA participants choose to invest their account assets, while the rest keep their funds in cash, treating their HSA as a regular bank account.

HSAs provide a unique three-pronged tax benefit, including tax-free contributions, investment growth, and withdrawals for qualified medical expenses. However, data indicates that many account holders are diluting these benefits by not taking advantage of investment opportunities. This behavior goes against the advice of financial experts who suggest treating HSAs as retirement accounts, similar to a 401(k) plan, to cover future healthcare costs.

Lee Baker, a certified financial planner based in Atlanta and a member of CNBC's Advisor Council, expressed the efficiency of using HSAs as an investment vehicle to cover retirement healthcare expenses. Baker stated, "There's a fair amount of healthcare you can expect to pay for in retirement, and this is simply a more efficient way to pay for it."

HSAs are tax-advantaged accounts designed for health expenses and are exclusively available to individuals enrolled in high-deductible health plans. Contributions made to HSAs are tax-free, and both investment growth and withdrawals are also tax-free when used for eligible medical costs.

The optimal strategy proposed by Baker involves holding cash in the HSA account equivalent to one's annual insurance deductible, while investing the remaining funds. This allows for current healthcare expenses to be paid out of pocket, enabling the HSA to grow for future needs. If faced with a substantial medical bill, individuals can dip into the HSA cash to cover the annual deductible in case they are unable to pay it out of pocket.

However, Hattie Greenan, PSCA's research director, highlights that many people cannot afford to pay for current medical bills out of pocket, resulting in constant withdrawals from their HSAs instead of investing the assets. Greenan stated, "If they need to tap it to pay current health expenses, they're not using it as an investment vehicle." The survey also revealed that approximately 40% of employers do not offer HSA investment options, limiting the investment potential for their workers.

Although limited investment options are provided by employers, employees are not bound to use the HSA options offered and can open an HSA account with a different provider to access investment opportunities elsewhere.

With HSAs offering significant tax perks compared to other investment accounts, experts urge individuals to reconsider their approach to these accounts and explore the long-term benefits they provide. As healthcare costs continue to rise, maximizing the investment potential of HSAs is crucial in ensuring financial security during retirement.

In conclusion, while HSAs offer excellent tax advantages, the majority of account holders fail to maximize the investment benefits available to them. Financial experts emphasize the importance of treating HSAs as retirement accounts and investing in them to cover future healthcare costs. As individuals plan for their financial future, properly utilizing HSAs becomes paramount in securing their long-term well-being.