Opening a health savings account, or HSA, not only saves you money on taxes, but also helps ensure that you have funds set aside to cover medical expenses.

But new data from Schwab's 401(k) Participant Survey 2020 reveals that many HSA participants aren't taking full advantage of their accounts. Specifically, only 41% are using their HSA to save for healthcare expenses in retirement, which means 59% of savers may be missing out on a huge wealth-building opportunity.

Why it pays to overfund your HSA

You have a few choices when it comes to putting money into your HSA: You can contribute just enough to cover your healthcare costs each year, or you can specifically overfund your account so that you're putting in more than what you expect to need on an annual basis. The latter, however, is the best way to make the most of your HSA.

Bottle of pills spilled over.

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As you may or may not know, HSAs are triple tax-advantaged. The money you contribute goes in tax-free, withdrawals are tax-free as long as they're used for qualified medical expenses, and the money you don't use immediately can be invested, at which point gains are tax-free. In fact, it pays to look at your HSA as a retirement savings plan -- one that allows you to grow wealth for the future without contributing to your tax burden.

Some people might hesitate to put extra money into an HSA because they're afraid of losing those funds. But that's not how HSAs work. While flexible spending accounts, or FSAs, must be depleted year by year, HSA funds never expire -- they can be carried all the way into retirement, when healthcare expenses tend to escalate.

Imagine you put an extra $2,400 into your HSA each year beyond what you spend on near-term medical costs. If you invest that money at an average annual 7% return (which is a bit below the stock market's average) over 20 years, you'll end up with about $98,400. That money can then be used to pay for Medicare premiums, prescription copays, and the many other healthcare expenses you might incur throughout retirement.

How much can you put into an HSA?

Like IRAs and 401(k)s, HSA contribution limits change from year to year. Currently, they're $3,500 at the individual level and $7,100 at the family level. In 2021, they'll increase by $100 to $3,600 and $7,200, respectively. Workers aged 55 and over can also make a $1,000 catch-up contribution -- both now and in 2021 as well.

Get the most from your HSA

An HSA gives you an opportunity to enjoy tax-advantaged growth on your investments, and for that reason alone, it pays to put extra money into yours as you can. In fact, some HSA participants specifically don't withdraw funds from an HSA to cover near-term medical costs even though that money is there. Instead, they leave their HSAs alone so they can grow tax-free. It's a strategy worth pursuing given the tremendous cost of healthcare in retirement, which catches so many seniors off guard.