Health Savings Accounts (HSA) can be invested in the stock market. Over a long enough time horizon, stocks have better rates of return than other investment classes as they have more risk. The idea is that in most years, most people barely touch the medical system so savings can be built up during good years to pay for rare but expensive years in the future.
This same type of logic applies if one is savings for college for a fourth grader or if one is saving for retirement as a mid-career professional. In both cases, the time horizon is long enough that a bad dip is probably going to be long run noise on an upward sloping line of returns. In both cases, the end date is fairly predictable and far enough in the future for intermediate and long run trends to dominate short run swings. As that predictable end-date gets closer, people will often rotate their assets into lower risk and lower return sectors.
Most people who have been diagnosed with cancer today were not planning to be told that they are facing the chance to max out their deductible and incur thousands of dollars of non-covered out of pocket expenses due to lost wages and non-medical accomodations.
Most people who have been hit by a car today were not intended for that to happen.
So what happens when the HSA that was sufficient to cover the deductible a week ago is in the middle of a bad short run swing down?
1,000 here, 1,000 there, pretty soon you’re talking about REAL losses… https://t.co/uBijefOAEJ
— Charles Gaba (@charles_gaba) February 8, 2018
For the people who ex-ante are lucky and healthy, this does not matter as long run trends will probably dominate. For the people who have consistent high cost chronic diseases, this does not matter either as an HSA is merely a tax device for current income. For people who had no savings, it does not matter either, but for people who had some small assets in an HSA and had bad luck., their luck just got a whole lot worse due to timing issues outside of their control.