You can open an HSA if you have a high-deductible health plan and meet income limits set by the IRS

An HSA is only available to people enrolled in a high-deductible health plan (HDHP) — not to those with standard health insurance, Medicare, Medicaid, or TRICARE. Your HDHP must meet IRS minimum deductible amounts, which change yearly. For 2024, the minimum deductible is $1,600 for individual coverage and $3,200 for family coverage. If your plan meets that threshold, you are may be able to access to open an HSA through a bank, credit union, or insurance company.

There is no income limit to open an HSA itself, but if you are claimed as a dependent on someone else's tax return, you cannot open one. You also cannot contribute to an HSA if you are enrolled in Medicare, even if you also have an HDHP. The same rule applies if you have coverage through a spouse's non-HDHP plan or if you receive Veterans Affairs benefits.

The window to open an HSA is limited. You must open it during the same month you enroll in your HDHP or within the first 60 days after enrollment. If you miss that window, you will have to wait until the next open enrollment period or until a may have access to life event (marriage, birth, loss of coverage) allows you to change plans outside the normal window.

Key Takeaways

  • You must be enrolled in a high-deductible health plan with a deductible of at least $1,600 (individual) or $3,200 (family) in 2024 to open an HSA.
  • You cannot have Medicare, Medicaid, TRICARE, or other non-HDHP coverage at the same time you contribute to an HSA.
  • You must open an HSA within 60 days of enrolling in your HDHP, or you will have to wait for the next open enrollment period.
  • You can open an HSA through a bank, credit union, or the insurance company that administers your HDHP.

Where to open an HSA account

Most people open an HSA through the same company that administers their HDHP — your health insurance provider often offers one directly. You can also open an HSA at a bank or credit union that offers them, or through a third-party HSA administrator like HealthEquity, Lively, or Fidelity. Each option has different fees, investment choices, and user interfaces, so compare them before you choose.

If your employer offers an HSA as part of your benefits package, they may have already selected a provider for you. In that case, you still have the right to open an HSA elsewhere and transfer money out later, but starting with your employer's plan is usually simpler because payroll deductions are automatic. Ask your HR or benefits department which provider they use and whether they contribute to employee HSAs.

When you open an account, you will need to provide your Social Security number, proof of HDHP enrollment (your insurance card or a letter from your plan), and basic banking information if you want to fund it by transfer. Some providers let you fund an HSA with a check or debit card instead.

What documents you need to open an account

You will need proof that you are enrolled in an HDHP. This can be your insurance ID card, a coverage letter from your health plan, or a screenshot of your plan details from your insurer's website. The HSA provider will verify your HDHP status with your insurance company, so make sure the information matches exactly.

You will also need a valid government-issued ID and your Social Security number. If you are opening an HSA at a bank or credit union, they will ask for your address and may request additional identity verification, especially if you are opening the account online. Have your driver's license or passport ready.

If your employer is contributing to your HSA, you may need to complete an employer authorization form so the HSA provider can accept payroll deductions. Your HR department will provide this or direct you to the HSA provider's website to complete it.

How to fund your HSA after opening it

You can fund an HSA in several ways: payroll deduction (if your employer offers it), bank transfer, check, or debit card. Payroll deduction is the most common and tax-efficient method because the money comes out before taxes are calculated, reducing your taxable income automatically. If your employer does not offer payroll deduction, you can transfer money from your bank account or mail a check to the HSA provider.

There is an annual contribution limit set by the IRS, which changes yearly. For 2024, you can contribute up to $4,150 for individual coverage or $8,300 for family coverage. If you are 55 or older, you can add an extra $1,000 per year (called a catch-up contribution). You must make all contributions for a given year by April 15 of the following year, or they will not count toward that year's limit.

If you contribute more than the annual limit, the excess is subject to a 6% excise tax each year it remains in the account. The IRS will notify you if you over-contribute, and you can withdraw the excess and any earnings on it before the tax deadline to avoid the penalty.

What happens if your HDHP coverage ends

If you lose your HDHP coverage or switch to a different type of health plan, you can no longer contribute to your HSA. However, the money already in your account stays there and can still be used for may have access to medical expenses for the rest of your life. You can also leave the money invested and let it grow, then withdraw it tax-free for medical costs whenever you need it.

If you switch to a non-HDHP plan (like a standard PPO or HMO), you must stop contributing immediately. If you continue to contribute after losing HDHP may be able to access, those contributions will be taxed as income and subject to a 20% penalty. The IRS will catch this when you file your taxes, so report the change to your HSA provider right away.

If you enroll in Medicare, your HSA contributions must stop in the month you turn 65, even if you have not yet claimed Medicare benefits. You can still use the money in your account for may have access to medical expenses, including Medicare premiums and out-of-pocket costs.

HSA may be able to access changes during the year

If you have a may have access to life event — marriage, birth, adoption, loss of coverage, or a change in your employer's health plan — you may be able to enroll in an HDHP outside of open enrollment. Once you enroll, you have 60 days to open an HSA. If you miss that window, you will have to wait until the next open enrollment period.

If you become ineligible for an HSA mid-year (for example, you switch to Medicare or enroll in Medicaid), you can still contribute for the month in which you lost may be able to access. After that month, you must stop contributing. The money already in your account remains yours and can be used for medical expenses indefinitely.

Frequently Asked Questions

Can I open an HSA if I have a spouse with a non-HDHP plan?

No. If your spouse has standard health insurance and you are covered under that plan, you cannot contribute to an HSA. However, if you have separate HDHP coverage (through your own employer, for example), you can open an individual HSA. Family coverage HSAs require that all family members be on the same HDHP.

What if I enroll in an HDHP but miss the 60-day window to open an HSA?

You will have to wait until the next open enrollment period or until a may have access to life event allows you to change plans. At that time, you will have another 60 days to open an account. You cannot contribute retroactively for the months you were ineligible.

Can I have an HSA if I am self-employed?

Yes. You can open an HSA if you have an HDHP, whether it is through your own business or purchased on the individual market. You can contribute up to the annual limit and deduct those contributions on your tax return. Self-employed people often use HSAs because the contributions reduce both income tax and self-employment tax.

What if my employer contributes to my HSA but I leave the job?

The money in your HSA belongs to you, not your employer. When you leave, the account stays open and the balance remains yours. You can continue to use it for medical expenses or leave it invested. If your new employer offers an HSA, you can transfer the balance to that account or keep both accounts open.

Do I have to use my HSA every year or lose the money?

No. Unlike a flexible spending account (FSA), HSA money does not expire. You can let it accumulate year after year and use it whenever you need it, even decades later. This makes an HSA a long-term savings tool, not just a way to pay for immediate medical costs.