Only 9 percent of America's 39 million health savings accounts invest a single dollar, by Devenir's count at year-end 2024. EBRI's database of 14.5 million accounts puts the share at 15 percent. Take either figure: at least 85 percent of a $147 billion pool sits in cash, earning close to nothing, inside the most tax-favored account in the federal code.
The average balance is $4,747, and in 2023 a third of holders withdrew more than they put in. That is a checking account with a tax form stapled to it. The HSA was built as a health 401(k): money goes in before tax and comes out untaxed for medical care, the one large expense almost nobody escapes in retirement. A 401(k) where nine in ten participants sat in cash would trigger an inquest. The detail I keep coming back to: the accounts that do invest hold roughly nine times the balance of the accounts that do not.
The mechanism is the default: the account arrives in the mail as a debit card, investing hides behind a separate election and a cash minimum, and the custodian earns more on your idle balance than it ever will on your index fund.