You cannot open a Health Savings Account (HSA) without health insurance that qualifies

To open an HSA, you must be enrolled in a High Deductible Health Plan (HDHP) at the time you open the account. The IRS does not allow HSAs for people without this specific type of insurance. If you do not have an HDHP, you cannot contribute to an HSA, and you cannot open one in the first place.

The connection between the HDHP and the HSA is not optional or flexible. Your HSA provider will verify your HDHP coverage before accepting your account application. If you lose your HDHP coverage, you can keep the money already in your HSA and spend it on medical costs, but you cannot add new money to it until you re-enroll in an HDHP.

Key Takeaways

  • An HDHP is the only type of health insurance that allows you to open and fund an HSA; plans without high deductibles do not may have access to.
  • Your HSA provider will ask for proof of HDHP coverage before opening your account, usually your insurance card or policy number.
  • If you drop your HDHP, you keep the money in your HSA but cannot add new contributions until you enroll in an HDHP again.
  • Some employers offer HDHPs as part of their benefits; others do not, so check your workplace options first.
  • If you buy insurance on your own through the marketplace, you can choose an HDHP plan if one is offered in your area.

What counts as a may have access to HDHP

An HDHP is defined by its deductible amount and out-of-pocket limits. For 2024, an individual HDHP must have a deductible of at least $1,600 and an out-of-pocket maximum of no more than $3,200. For family coverage, the deductible must be at least $3,200 with an out-of-pocket maximum of no more than $6,400. These numbers change each year.

Not every plan with a high deductible is an HDHP. Some plans have high deductibles but do not meet the IRS definition because they cover certain services before you meet the deductible—for example, covering preventive care or urgent care visits at a flat copay. If your plan does that, it does not may have access to for an HSA, even if the deductible itself is high.

Your insurance company or employer will tell you whether your plan is HSA-may have access to. If you are unsure, ask your benefits administrator or call the insurance company directly. They can confirm in one call whether you can open an HSA with that plan.

Where to get an HDHP if you do not have one

If your employer offers health insurance, ask your benefits department or HR whether they offer an HDHP option. Many large employers do, though not all. If your workplace plan does not include an HDHP, you cannot use that employer's insurance to open an HSA.

If you do not have employer insurance or your employer does not offer an HDHP, you can buy one on your own through the health insurance marketplace in your state. Go to Healthcare.gov to see plans available in your area. You can filter by plan type and deductible amount. HDHP plans are usually cheaper in monthly premiums than other plans, which is one reason people choose them—the lower premium offsets the higher deductible.

You can enroll in a marketplace HDHP during the annual open enrollment period (usually November 1 through January 15) or if you have a may have access to life event, such as losing other coverage, moving, or getting married. Once your HDHP coverage begins, you can open an HSA immediately.

How to open an HSA once you have an HDHP

You do not have to open an HSA through your employer or insurance company, though some offer them. You can open an HSA with a bank, credit union, or investment firm that offers HSA accounts. Common providers include Fidelity, Lively, HealthEquity, and many local banks.

When you apply, you will need to provide proof of your HDHP coverage. This is usually your insurance card, policy number, or a letter from your insurance company stating that your plan is HSA-may have access to. The HSA provider will verify this information before opening your account.

Once your account is open, you can contribute money up to the annual limit set by the IRS. For 2024, the limit is $4,150 for individual coverage and $8,300 for family coverage. These limits also change each year. You can contribute all at once or spread contributions throughout the year.

What happens if you lose your HDHP coverage

If you switch to a different health plan that is not an HDHP—for example, a standard PPO or HMO—you can no longer contribute new money to your HSA. However, you keep the money already in the account and can spend it on medical costs at any time, even after you no longer have the HDHP.

This is one of the main advantages of an HSA: the money is yours to keep and use, unlike a Flexible Spending Account (FSA), which usually requires you to spend the money within the same year or lose it. If you leave your job and lose employer coverage, your HSA stays with you and the money remains available.

If you re-enroll in an HDHP later—whether through a new employer or the marketplace—you can start contributing to your HSA again. You do not need to open a new account; you can resume contributions to the same account if you still have it open.

HSA alternatives if you cannot get an HDHP

If an HDHP is not available where you live or through your employer, a Flexible Spending Account (FSA) is another way to set aside pre-tax money for medical costs. An FSA does not require an HDHP and can be offered by many employers. However, FSA money usually must be spent within the same calendar year or you lose it, whereas HSA money rolls over year to year.

Another option is to pay medical costs with after-tax dollars and keep receipts. This is less efficient than an HSA or FSA because you do not get the tax break, but it is available to anyone regardless of insurance type.

If you are self-employed or do not have access to employer insurance, buying an HDHP on the marketplace is often the most practical way to open an HSA. The lower monthly premium of an HDHP can offset the higher deductible, especially if you are generally healthy and do not expect high medical costs in a given year.

Frequently Asked Questions

Can I open an HSA if I have Medicare?

No. Once you enroll in Medicare, you are no longer may be able to access to contribute to an HSA, even if you also have an HDHP. You can keep money already in your HSA and spend it on medical costs, including Medicare premiums and out-of-pocket costs, but you cannot add new contributions.

What if my HDHP coverage starts in the middle of the year?

You can open an HSA as soon as your HDHP coverage begins. Your contribution limit for that year is reduced based on the number of months you are covered. For example, if you enroll in an HDHP in July, you can contribute one-half of the annual limit for that year.

Do I have to use the HSA through my employer, or can I open one elsewhere?

You can open an HSA with any provider that offers them, not just your employer. Some employers offer HSAs as part of their benefits package, but you are not required to use theirs. You can shop around for better fees, investment options, or customer service and open an account with a different bank or investment firm.

Can I have both an HSA and an FSA at the same time?

Generally no. If you have an HSA, you cannot also have a regular FSA. However, some employers offer a limited-purpose FSA that covers only dental and vision costs, which you can pair with an HSA. Check with your employer about what combinations are allowed in your plan.

What if I do not contribute the full amount to my HSA in a given year?

You do not have to contribute the full annual limit. You can contribute any amount up to the limit, and the money rolls over to the next year. There is no "use it or lose it" rule with HSAs, unlike FSAs. The money stays in your account until you spend it.