Not everyone can open an HSA — you need a specific type of health insurance

To open a Health Savings Account (HSA), you must be enrolled in a High Deductible Health Plan (HDHP). This is the hard requirement. If your insurance is a standard PPO, HMO, or any plan that doesn't meet the IRS definition of an HDHP, you cannot open an HSA, no matter how much you want to save for medical expenses.

The IRS sets minimum deductible amounts each year. For 2024, an HDHP must have a deductible of at least $1,600 for individual coverage or $3,200 for family coverage. Your plan also cannot cover most preventive care before you meet the deductible — that's what makes it "high deductible." If your employer or your insurance marketplace plan doesn't meet these thresholds, an HSA is not available to you.

You also cannot be claimed as a dependent on someone else's tax return, and you cannot be enrolled in Medicare. If you turn 65 and sign up for Medicare Part A, your HSA may be able to access ends that month, though you can still spend money already in the account.

Key Takeaways

  • You must be enrolled in an HDHP with a deductible of at least $1,600 (individual) or $3,200 (family) in 2024 to open an HSA.
  • You cannot have an HSA if you are enrolled in Medicare, covered by a spouse's non-HDHP plan, or claimed as a dependent on someone else's taxes.
  • Your employer may offer an HDHP through their benefits, or you can purchase one through your state's health insurance marketplace.
  • If you lose HDHP coverage, you can no longer contribute to an HSA, but you keep the money already in the account and can spend it on medical expenses for life.

Where to find an HDHP if your employer doesn't offer one

If your job does not provide health insurance or does not offer an HDHP option, you can shop for one through your state's health insurance marketplace. Go to healthcare.gov, enter your zip code, and filter for plans labeled as HDHP or "High Deductible Health Plan." The marketplace shows you the deductible, out-of-pocket maximum, and monthly premium for each plan so you can compare.

Some people buy an HDHP through the marketplace specifically to open an HSA, because the tax advantages of the account can outweigh a higher deductible. This strategy works best if you are healthy, have money to set aside for medical costs, and want to save for future healthcare expenses. If you expect high medical bills this year, a lower-deductible plan may cost you less overall, even without an HSA.

Self-employed people and business owners can also purchase an HDHP through the marketplace or through a professional association plan. The rules are the same: you need the HDHP to open the HSA.

What happens if you lose HDHP coverage

If you change jobs, lose employer coverage, or switch to a different health plan that is not an HDHP, you can no longer contribute new money to your HSA. Your contribution window closes the month your HDHP coverage ends.

The money already in your HSA stays yours. You can continue to spend it on may have access to medical expenses — doctor visits, prescriptions, dental work, vision care, and many other healthcare costs — for the rest of your life. There is no time limit on using HSA funds once they are in the account. Some people treat their HSA like a retirement account, letting the balance grow and only withdrawing for medical expenses in later years.

If you withdraw HSA money for something that is not a may have access to medical expense before age 65, you owe income tax on that amount plus a 20 percent penalty. After 65, you can withdraw for any reason without the penalty, though you still owe income tax on non-medical withdrawals.

Special cases: Medicare, Medicaid, and dependent status

Once you enroll in Medicare Part A, you lose HSA may be able to access immediately. You cannot have both at the same time. If you are approaching 65 and want to maximize your HSA, you can contribute until the month you sign up for Medicare, then stop. The funds remain available for medical expenses.

Medicaid does not prevent you from having an HSA, but you must still be enrolled in an HDHP. Some states offer HDHP options to Medicaid members, though this is uncommon. If you are on Medicaid and want an HSA, contact your state Medicaid office to ask whether they offer an HDHP.

If you are claimed as a dependent on your parent's or spouse's tax return, you cannot open an HSA. This applies even if you have your own job and your own health insurance. The IRS rule is about tax filing status, not about who pays for your insurance. Once you file your own tax return and are no longer a dependent, you become may be able to access.

Employer HDHP plans and family coverage

Many employers offer an HDHP as one of their health plan choices during open enrollment. If your employer offers one, you can usually enroll during the annual enrollment period or within 30 to 60 days of hire. Some employers automatically enroll new employees in an HDHP; if that happens and you do not want it, you can switch to a different plan during open enrollment.

If you have family coverage through an HDHP, only the family members listed on the plan can have HSAs. A spouse can open their own HSA if they are also on the HDHP. Children on the plan can have HSAs once they reach the age of majority in your state (usually 18), though a parent can open a custodial HSA for a minor child in some cases.

Some employers contribute money to employee HSAs as part of their benefits package. This is called an employer contribution, and it counts toward your annual contribution limit. If your employer puts $1,000 into your HSA, you can only contribute $2,150 more (for individual coverage in 2024) before hitting the limit.

Self-employed and business owner rules

If you are self-employed or own a business, you can open an HSA as long as you have an HDHP. You can purchase the HDHP through the marketplace, through a professional association, or through a broker. The contribution limits and rules are the same as for employees.

One difference: if you have employees, you cannot discriminate in offering HSAs. If you offer an HDHP to yourself, you must make it available to all employees under the same terms. You can contribute to your own HSA and also contribute to employee HSAs as part of their benefits, but the rules around employer contributions apply to everyone equally.

Frequently Asked Questions

Can I open an HSA if I have a spouse on a different health plan?

Yes, if you are enrolled in an HDHP and your spouse is not, you can open an individual HSA. Your spouse cannot open an HSA unless they also enroll in an HDHP. If you both enroll in the same family HDHP, you can each open an HSA and contribute up to the family limit combined.

What if I am unemployed but buy an HDHP on the marketplace?

You can open an HSA as long as the plan you purchase meets the HDHP definition. The marketplace will show you which plans may have access to. You contribute to the HSA yourself rather than through an employer, and you can deduct your contributions on your tax return if you are self-employed or file as an individual.

Can I have an HSA and a Flexible Spending Account at the same time?

No. You cannot have both an HSA and a Flexible Spending Account (FSA) in the same year. If your employer offers both, you must choose one. Some employers offer a limited-purpose FSA for dental and vision only, which you can combine with an HSA; ask your benefits administrator whether this option is available.

Do I lose my HSA if I go on disability?

Not automatically. If you remain enrolled in an HDHP while on disability, you can keep contributing to your HSA. If your disability coverage changes your health insurance to something other than an HDHP, you stop being able to contribute but keep the money in the account. Check with your employer's benefits office about how disability affects your health plan enrollment.

Can I open an HSA if I am a student?

Yes, if you are enrolled in an HDHP. Many students are covered under a parent's plan, which may prevent you from opening an HSA if you are claimed as a dependent. Once you file your own tax return and are no longer a dependent, you can open an HSA if you have HDHP coverage through a job, the marketplace, or a student health plan that meets HDHP requirements.