Most individuals who own a health savings account do not think of their HSA as a retirement account. However, unspent funds left in an HSA can accumulate over the years. Because of the long-term earning capacity of an HSA, some account owners may want to move their HSA into an investment that pays a higher rate of return.

Although not primarily intended to serve as a retirement account, HSAs share many characteristics with individual retirement accounts. With either account type, contributions and subsequent earnings are tax-deferred. The extra advantage of an HSA is that withdrawals used for qualified medical expenses are received tax-free.

HSA earnings

Most HSAs are initially placed in an investment similar to a savings account. A low rate of return is acceptable if the funds are likely to be withdrawn within a short time. In 2015, only 3 percent of HSAs were invested in assets other than cash. The HSAs that invested in other assets generally had larger balances than HSAs in cash only.

Accompanying health insurance

Although you must have a high-deductible health plan to fund an HSA, the insurance policy and the financial account are separate. Tax-free distributions from the HSA can be used to pay medical expenses after the insurance deductible is met. To earn a higher rate of return on unspent HSA funds, you might consider a rollover of the HSA.

HSA rollover

The rollover requirements for an HSA are similar to the rollover rules for IRAs. Some financial institutions offer HSA options that invest in mutual funds. Your ability to roll over an HSA may depend on whether you set up the account on your own, or whether your employer opened the account.

Even if your employer initially funded your HSA, you may be able to roll over the account. Ask the company or the HSA trustee whether a rollover is permissable. If an HSA rollover is allowed, you might consider moving the account balance into a mutual fund consisting of major U.S. stocks. Over the long run, stocks may outperform the rate of return on your current HSA.

Remember to adhere to certain rules regarding transfers and rollovers. If possible, request a direct transfer from one trustee to the other trustee. If you must accept a check, complete the rollover contribution within 60 days.

Once you reach age 65, your accumulated HSA funds can be spent for any purpose without incurring the penalty for nonmedical use. Contact a financial planning company like Family Financial Partners for more advice on the place of an HSA in your overall financial plan.