Still Holding $48,000 in Cash Inside Your HSA at 61? These 3 ETFs Put It to Work

You opened a health savings account, funded it for years, and then left it alone. Now you’re 61, the balance has reached $48,000, and all of it is still in cash. That’s common. Many HSAs hold contributions in cash by default, and the money only gets invested if you choose to invest it.

If you never made that choice, or didn’t know you could, three ETFs can put the account to work. The Schwab 1000 Index ETF (NYSEARCA:SCHK) supplies long-term growth. The Vanguard Short-Term Inflation-Protected Securities Index Fund ETF (NASDAQ:VTIP) provides inflation protection. The iShares 3-7 Year Treasury Bond ETF (NASDAQ:IEI) sits in the middle as a steadier layer.

Your HSA Tax Breaks Do More When the Money Grows

HSAs get some of the most generous tax treatment available. Under IRS Publication 969, distributions used for qualified medical expenses aren’t taxed, and earnings aren’t included in your income while they stay in the account. If you spend the money on anything else, it’s subject to income tax and may also face an additional 20% tax.

That additional tax goes away later. Under 26 U.S.C. § 223(f)(4)(C), it doesn’t apply to distributions made after you reach Medicare eligibility age. After that point, non-medical withdrawals are still taxed as income, just without the extra tax. The IRS also says you don’t have to take withdrawals from your HSA each year, so the balance can stay invested for health costs that are years away.

Your time to add money is limited. Beginning with the first month you are enrolled in Medicare, your contribution limit is zero, and that includes periods of retroactive coverage. You can still spend the money after that, but you can’t add to it. If you’re otherwise eligible, the years before Medicare enrollment are your last chance to contribute. Meanwhile, prices keep climbing. The Consumer Price Index reached 336.3 in September 2026, up 0.6% from a month earlier.

SCHK Puts Long-Term Money in U.S. Stocks

SCHK tracks the Schwab 1000 Index, roughly the 1,000 largest U.S. companies, so one trade gets broad U.S. stock exposure. That makes it the growth piece for HSA money you don’t expect to touch for many years. In its August 31, 2026 portfolio report, Apple (NASDAQ:AAPL | AAPL Price Prediction) was the largest visible position at about 6.5% of net assets, and Amazon (NASDAQ:AMZN) made up about 3.6%. The fund held about $5.9 billion in net assets.

Investors who stayed put have done well. SCHK’s adjusted price rose about 13.8% over the past year and around 74.6% over five years. That growth comes with full stock-market swings, so SCHK is best suited to money with a long time horizon.

VTIP Guards Near-Term Spending Against Inflation

VTIP holds short-term Treasury Inflation-Protected Securities, typically with less than five years to maturity. TIPS adjust their principal with inflation, and the short maturities keep the fund less sensitive to interest-rate changes. That suits health bills you expect to pay over the next several years. Keep two limits in mind. TIPS follow broad consumer inflation, which can differ from medical costs. Bond funds hold bonds but never mature, so their share prices can still fall.

So far, VTIP’s changes have been small. It gained about 2% over the past year and around 15.4% over five years.

IEI Fills the Gap Between Cash and Stocks

IEI tracks the ICE U.S. Treasury 3-7 Year Bond Index, which means it holds U.S. Treasury notes with three to seven years left until maturity. It sits between cash and stocks: steadier than SCHK, with more income potential than idle cash. On October 26, three-, five-, and seven-year Treasuries yielded 4.79%, 4.84%, and 4.91%. It has a 0.15% expense ratio, launched in January 2007, and holds about $17.7 billion in net assets.

Its recent record shows the risk. IEI is down 1.22% year-to-date and slipped about 1% over the past year. Intermediate Treasuries tend to fall when interest rates rise.

Check Your Provider’s Fund Menu and Keep Some Cash

Not every HSA offers these funds. Some providers limit their investment menus, and some require you to keep a minimum cash balance before you can invest the rest. Check your provider’s options. If the menu is limited, keep in mind that HSA providers differ.

Don’t invest all of it, either. Keep enough in cash to cover near-term medical costs such as your deductible, so a surprise bill doesn’t force you to sell when prices are down.

Why These Three Funds Fit a 61-Year-Old’s HSA

You’ve already done the hard part by saving $48,000 that can be spent tax-free on medical care. Leaving all of it in cash gives up the tax-free growth the account allows. SCHK covers health costs far in the future, VTIP protects nearer-term spending from inflation, and IEI fills the space between them. Together, they put money that has been sitting idle to work while you still have years to keep contributing.

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