Triple Tax-Free Investing: 3 ETFs for Your Health Savings Account

A Health Savings Account (HSA) offers a unique triple tax advantage: contributions are deductible, growth compounds untaxed, and qualified medical withdrawals are never taxed. This makes it an attractive option for individuals to save for medical expenses while also building a tax-free retirement nest egg. However, not all investments are created equal, and choosing the right ones can make a significant difference in the long run.

Understanding the IRS Requirements

To fund an HSA, you need a high-deductible health plan. The IRS defines this for 2026 as a plan with a self-only deductible of at least $2,900 and no more than $4,400, or a family deductible of at least $5,850 and up to $8,750. This requirement ensures that individuals can pay current medical costs from their checking account and leave the HSA untouched, allowing every dollar invested to compound tax-free for decades.

Three Low-Cost ETFs for Your HSA

If you've saved over $1,000,000 and are looking to create a long-horizon portfolio within your HSA, three low-cost ETFs can provide a complete and diversified investment solution. These ETFs are:
  • Vanguard S&P 500 ETF (NYSEARCA:VOO)
  • Schwab U.S. Large-Cap Growth ETF (NYSEARCA:SCHG)
  • iShares Core MSCI Total International Stock ETF (NASDAQ:IXUS)

VOO: A Broad, Cheap, Tax-Efficient Index Fund

VOO tracks the S&P 500, giving you a stake in roughly 500 of the largest U.S. companies. The expense ratio is 0.03%, which means $9,997 of every $10,000 stays invested. This makes VOO an ideal core holding for your HSA, providing broad market exposure at a low cost. Performance reflects that discipline: VOO is up 12.85% year to date, 20.9% over the past year, and 313.91% over the past decade.

SCHG: Accelerating Growth with a Higher-Turnover Profile

SCHG tracks the Dow Jones U.S. Large-Cap Growth Total Stock Market Index, concentrating on the fastest-growing large-caps. This includes NVIDIA, Apple, Microsoft, Amazon, Alphabet, Broadcom, Meta, and Eli Lilly, among others. Total net assets sit at roughly $61.1 billion. The fund is up 17.17% over the past year and 445.43% over the past decade, outrunning the broader S&P thanks to that growth tilt. Inside an HSA, the tax drag on rebalancing and dividends is zero, making the higher-turnover, higher-appreciation profile of a growth fund even more valuable.

IXUS: Smoothing Returns with International Equities

IXUS fixes the issue of an all-domestic HSA by tracking the MSCI ACWI ex USA IMI Index across developed and emerging markets. Fund assets total about $56.2 billion. Holdings run from Alibaba and Royal Bank of Canada to Shopify, Toronto-Dominion Bank, and Volvo. Foreign markets have led in 2026: IXUS is up 16.33% year to date and 26.57% over the past year, ahead of VOO on both measures. Even if U.S. dominance resumes, holding international equities smooths returns across decades.

Important Considerations for Your HSA

While the three ETFs mentioned above can provide a solid foundation for your HSA, there are a few important considerations to keep in mind. Most HSA custodians require a minimum cash balance (often $1,000 to $2,000) before you can invest the rest, and some charge a monthly investment fee. Additionally, an HSA only works as a retirement vehicle if you can actually pay medical bills from other savings. If a surprise ER visit forces you to sell VOO in a down year, the tax magic still applies, but you lose the compounding you were counting on. Build a cash buffer outside the HSA first, and then let VOO, SCHG, and IXUS do the quiet, tax-free work of decades.