HSAs are taking in record cash—and keeping it there

Workers put more money into health savings accounts than ever before last year, then left most of it in cash. The Plan Sponsor Council of America's 2026 Health Savings Account Survey, sponsored by HSA Bank, found that 83% of eligible employees contributed in 2025, up from 73.4% a year earlier, according to InvestmentNews, with average contributions of $2,829 and balances ending at $6,477.

Only 22% of HSA participants invested any portion of their balance in 2025, a slow rise from 20.3% in 2024 and 18.9% in 2023—so contribution participation jumped 9.6 percentage points in a single year while investment participation rose 1.7 points. Employers have built the plumbing—68.5% now offer HSA investment options, roughly 13 percentage points more than in 2022—but the plumbing is barely used.

Devenir's year-end figures put HSA investment assets at roughly $85 billion after 33% growth in 2025, yet invested accounts still make up only about 10% of all HSAs; accounts with investments carried average balances nearly ten times higher than funded accounts holding cash alone. The account that does not invest may never be a retirement asset; it is a medical checking account with a tax benefit.

EBRI's research earlier this month found that just 18% of accountholders held equities, funds or other non-cash assets in 2024, and the average balance of $5,532 covered only about two-thirds of the individual out-of-pocket maximum under a high-deductible health plan—the record participation rate and cash-heavy composition are two sides of the same gap. As this publication has noted, record participation masks a retirement-plan gap.

Hattie Greenan, PSCA's director of research and communications, described the account as evolving 'from a healthcare spending vehicle into an important financial wellness and long-term retirement strategy.' The employer-level data in the same survey suggests that evolution is only beginning, as only about one-quarter of employers actively position HSAs as part of a broader retirement savings strategy—a gap PSCA describes as an area of opportunity rather than a settled problem.

Nearly two-thirds of employers—65.5%—cited employee education as their most common HSA-related concern, and half said they provide HSA education only during open enrollment; that is not a strategy, it is a pamphlet drop. The employee weighing an HSA election during open enrollment is thinking about next year's deductibles, not about a balance that needs to compound for two decades, and the investment option is the most complicated decision in the enrollment packet, and it gets the least attention.

Pamphlet drops do not change the decision that matters, because contribution elections are increasingly shaped by automatic enrollment, employer contributions and decision-support tools, according to Greenan, while the investment election has no comparable default. When employees never make an affirmative choice, the balance stays in cash—and for most, it stays in cash for decades. The 22% investment rate has barely moved in two years, even as the menu of investment options has expanded.

The plan sponsor play is to build an investment default into HSA enrollment, tiered by age or balance, the way 401(k) qualified default investment alternatives already work. The accounts that invest end up with balances nearly ten times larger, and those are the accounts that will still be alive when a retiree needs to pay Medicare premiums out of them. The cash account will have been spent down by copays years before retirement.

With 68.5% of employers already offering investment options, the infrastructure cost is sunk; the remaining cost is a plan design change that shifts the default from cash to a target-date or balanced allocation for balances above a threshold. Devenir's data suggests the default is the difference between a health-care cash drawer and a retirement asset.

The next PSCA survey will show whether the 22% investment rate finally moves. It will not move on the strength of another open-enrollment email; it will move when plan sponsors treat the HSA as a second retirement account and build the default that makes the choice for their employees.