Healthcare Inflation Hits 10.3% as HSA Assets Languish
Operators and individuals must invest HSA funds to counter rising costs that outpace general inflation by 280%.
Updated on Oct. 27, 2026 in Healthcare
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Healthcare costs are rising at 10.3% year over year, a rate 280% higher than the 3.7% Consumer Price Index. As medical inflation grows, many individuals with Health Savings Accounts (HSAs) continue to leave their assets in cash rather than investing them for long-term growth.
Why it matters
With a 65-year-old couple requiring roughly $418,000 in savings for lifetime healthcare, failing to invest HSA funds limits the ability to hedge against rapid medical cost inflation. Because HSA contributions, growth, and withdrawals are tax-advantaged, underutilizing these accounts creates a significant retirement liability.
Current healthcare cost inflation of 10.3% is 280% higher than the 3.7% Consumer Price Index. Only 11% of the 42.6 million total HSA accounts held invested assets as of June 30, 2026, leaving 4.7 million accounts actively positioned for long-term growth.
The players
Milliman
An actuarial and consulting firm that provides research on health trends and launched healthcare-focused ETFs in 2026.
Devenir
A research firm specializing in the Health Savings Account market that produces annual midyear industry data reports.
The details
The 'shoebox strategy' allows operators to pay medical expenses with outside cash while keeping receipts to reimburse themselves from their HSA at a later date, effectively turning the account into a tax-advantaged investment vehicle. While investors can reimburse themselves for past expenses without a time limit, most account holders leave funds as cash. This leaves them vulnerable to the projected $199,000 and $219,000 in savings needed for individual male and female retirees on Medicare.
Timeline
April 2026 marked the end of the healthcare claims incurred period.
June 2026 marked the end of the healthcare claims paid period.
June 30, 2026, served as the snapshot date for HSA investment data.
September 2026 saw the release of the Milliman Health Trend Guidelines.
October 13, 2026, marked the publication of the Devenir 2026 Midyear HSA Research Report.
Market Landscape
The utility of these accounts is governed by the framework in IRS Publication 969 on health accounts. This gap in investment usage persists despite the tax-advantaged structure intended to help individuals manage long-term medical liabilities.
Operators and individuals should consider the shoebox strategy to maximize the tax-advantaged growth of HSA funds. Reviewing whether your current HSA balance is allocated to investment vehicles rather than cash is essential to covering projected retiree medical costs.
The takeaway
Healthcare inflation is currently outpacing general economic growth, necessitating a shift from cash-based to investment-based HSA management. Operators should assess their contribution limits and ensure they are capturing receipts for past expenses to leverage future tax-free reimbursements.
Further reading
For more on managing medical cost liabilities, visit our Healthcare section.
More information
Review the IRS Publication 969 on health accounts for detailed rules on contributions and qualified medical distributions.
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Is now a good time to move your health savings account funds into long-term investments?
