People Are Using It to Pay for Cold-Plunge Tubs—and to Stockpile Money for Retirement. It Started Out as Something Else Entirely.

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Morgan Goodstadt made a radical change about six months ago. The registered dietitian runs her own virtual private practice, Good Nutrition, in Greenwich, Connecticut, where she offers one-on-one nutrition counseling. Her patients are a mix: Some have diabetes, some deal with autoimmune conditions or digestive issues, and others are just looking to be more health-conscious in their food choices. It’s all something any nutrition coach might encounter—except, at Good Nutrition, patients can now pay using their HSA or FSA accounts.
For the uninitiated: Health savings accounts and flexible spending accounts are held in addition to regular health insurance and allow people to set money aside to pay for qualified medical expenses. That typically means anything that falls under the rubric of traditional medical, dental, and vision services, as well as the costs of prescription drugs. According to research published in JAMA Health Forum last year, almost a quarter of U.S. residents ages 19 to 64 who have employer-sponsored health insurance also have an HSA or FSA.
More recently, however, Americans with HSAs and FSAs are finding ways to use these accounts more creatively. Or, in other words, in ways that weren’t originally intended. Some now use the money to pay for preventive health services and goods such as meal plans, fitness trackers, gym memberships, and nutrition help. Some are even pushing the bounds into wellness products: One company that facilitates HSA and FSA use claims you can use these accounts to buy an infrared sauna blanket, a Sleep Number bed, or a cold-plunge tub.
“I think it’s great,” says Goodstadt of the option to use these accounts to pay for nutrition counseling. “In the corporate world, I had an HSA card, but I didn’t know how to use it. It’s just giving people more options.”
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In other cases, regarding HSAs specifically, people are using the money in a much savvier way. One nice perk of health savings accounts is that any money deposited is pretax, meaning Uncle Sam can’t touch it. Increasingly, people who open HSAs to save money that would otherwise be used on medical costs are instead letting their cash grow with the market over time—creating, in effect, a supplemental retirement account.
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Who doesn’t want a cushier retirement or an easier way to pay for that gym membership? And yet, not every American can access an HSA or FSA account. Eligibility criteria govern both. And if you don’t have a lot of money, you’re probably using these accounts to cover the likes of copays and medical emergencies. If you’re swimming in cash and healthy? You might be using them to try out wellness trends—and get richer.
The FSA predates the HSA by 25 years. It was created as part of the Revenue Act of 1978. Flexible spending accounts are owned by employers, so any funds a person deposits each year don’t roll over. The HSA comes along in 2003 as part of the Medicare Prescription Drug, Improvement, and Modernization Act. While both the FSA and HSA let people save money pretax for medical expenses, that’s generally where the similarities lie. Health savings accounts, by contrast, are owned by the individual, and therefore are much more precious. Put money in an HSA, and those dollars are rolled over year after year after year.
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As a member of the U.S. Treasury Department during the George W. Bush administration, Roy Ramthun led the implementation of HSA accounts. But even as early as the 1990s, he says, there were efforts on Capitol Hill to create health savings accounts.
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“The main thing that people did not like about the flexible spending accounts is that the money is use it or lose it every year. It wasn’t portable, you couldn’t invest it, you couldn’t save it for the future,” says Ramthun, who now runs a business consulting companies that provide HSAs and employers who offer HSAs to their workers. “The thought was, Why can’t we essentially create a medical IRA?, and give people a reason and incentive to save money for their future health care expenses, not just for their current expenses.”
In principle it’s a great idea. Research published this March by the Employee Benefit Research Institute looked at the amount of money Americans will need in retirement to pay for health care alone. It’s “eye-wateringly high,” says Jake Spiegel, senior research associate at EBRI. One example the report used is that of a 65-year-old married couple with “particularly high prescription drug expenditures” enrolling in Medicare today. In order to have a 90 percent chance of not outliving their savings, that couple will need roughly $430,000—and that’s just medical expenses; it doesn’t cover things like rent, or mortgage payments, or long-term care along the lines of a home health aide or a nursing home.
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In practice, however, the HSA isn’t necessarily a great way to save for these expenses. The catch comes down to who even qualifies. For starters, you must be enrolled in a high-deductible health plan: For 2025, that means a plan that has a deductible of at least $1,650 for single coverage and $3,300 for family coverage. The trade-off here is simple: If you can handle that kind of high deductible, you can lower your monthly premium payments and bank the money you save in an HSA. (In 2025, those contribution limits are $4,300 for singles and $8,550 for families.) You also can’t have health coverage that would disqualify you, something like Medicare. And you can’t be claimed as a tax dependent by somebody else.
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“I’ve never taken a dime out of my HSA because I knew that this was a way to supplement any retirement planning,” says Ramthun, who’s had his account since 2005.
Assemble a few heroic assumptions, and someone who starts making maximum contributions to an HSA in their mid-20s could end up with a million bucks—which, again, is pretax, and once you turn 65, you can spend that money on nonmedical expenses with no penalty (although, at that point, anything other than a health care expense gets taxed like regular income).
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More recently, upstart companies have found ways to pair people with various health services in order to use their FSA money before it’s gone, or to put a pile of HSA savings to use sooner than retirement. Think of something like Truemed, the company co-founded a few years ago by Calley Means, a former food-and-pharma-company consultant (and supporter of the Make America Healthy Again movement led by Robert F. Kennedy Jr.). Truemed partners with a variety of health and fitness companies, and then in turn helps people with FSA and HSA accounts determine whether they can spend their money on meal kits, memberships to gyms like Orangetheory and CrossFit, personalized nutrition plans, and anything else that falls under wellness and prevention as opposed to diagnosis and treatment. As long as someone obtains what’s called a “letter of medical necessity” from a Truemed doctor (which you can get by filling out a questionnaire), the possibilities are limited only by Truemed’s extensive list of partner brands.
The IRS has pushed back on the idea that a doctor’s note, dispensed without an in-person appointment, is enough for you to pay for a cold plunge with tax-free dollars: “Some companies mistakenly claim that notes from doctors based merely on self-reported health information can convert non-medical food, wellness, and exercise expenses into medical expenses, but this documentation actually doesn’t,” reads a news release. (“Let’s call this what it is: an attempt by regulators to confuse and freeze the trend of Americans learning that they can work with their doctors to reverse disease with food, not drugs,” Means told the Washington Post.)
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Further, the HSA is slammed from time to time as a tax break for wealthy people. Being healthy and having lots of money makes the HSA the perfect tax-free vehicle to shore up retirement savings. As Sherry Glied, a health economist, New York University professor, and pointed critic of health savings accounts, wrote in 2022: “HSAs are a tax advantage for better-off people.”
Employers could chip in, of course. But data assembled by KFF, a nonprofit health policy research, polling, and news group, shows that many employers that sponsor HSA-qualified high-deductible plans don’t contribute to HSAs established by their employees. (Granted, some small businesses might not be able to make such contributions.) Generally, among businesses that do chip in on HSAs, further KFF data shows that close to two-thirds of covered workers receive an employer contribution of less than $800, half the deductible of an HSA-qualifying plan for a person who is single.
“Less than 10 percent of workers are involved in a plan where the account contribution is larger than the deductible,” says Matthew Rae, a health care policy expert at KFF.
Which means for people without large incomes, or without much in the way of savings, enrolling in an HSA and using it for investments or wellness extras has the potential to squeeze them financially. If a child breaks a leg and requires a visit to the ER, not pulling money from an HSA (or FSA) isn’t an option. Ramthun points out that such considerations were factored into the creation of health savings accounts. It’s a requirement that the insurance plans they accompany have annual limits on out-of-pocket expenses. In 2025, the ceiling is $8,300 for single coverage and $16,600 for family coverage.
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“Most of us don’t need a lot of health care every year,” he says. “But the people who actually do need a lot of health care, there’s where those out-of-pocket limits … actually protect them against bankruptcy.”
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It seems, however, that HSAs are going to play a larger role going forward. Rae says that the number of people enrolled in HSAs will increase in the future. Spiegel points out that EBRI data shows that only about 13 percent of HSA holders are actually investing their account balance—but that’s compared to about 6 percent when he started at EBRI in 2019. Generally, the longer someone holds their account, the bigger their balance becomes, and the more likely they are to invest the money instead of spending it.
“It’s not a strategy that’s particularly widely used right now,” he says, “but we have seen that number slowly tick up year after year after year after year.”