Yes, health savings accounts are still available and actively used

Health savings accounts (HSAs) have not gone away. They remain a real option for people with certain types of health insurance, and thousands of people open them every year. The rules have not changed significantly in recent years — you still need a high-deductible health plan to open one, you still contribute pre-tax money, and you still own the account even if you change jobs or insurance.

The confusion often comes from the fact that HSAs are not advertised the way a savings account at a bank is. Your insurance company or employer may not mention them unless you ask, and many people never hear about them at all. But if you have a may have access to plan, the option is there.

Key Takeaways

  • You can open an HSA only if you are enrolled in a high-deductible health plan (HDHP) — this is the main requirement, and most other health plans do not may have access to.
  • You contribute money before taxes are taken out of your paycheck, which reduces the income you pay taxes on that year.
  • Money you do not spend on medical care stays in the account and grows year to year — you do not lose it at the end of the year like a flexible spending account (FSA).
  • You can open an HSA through your employer's benefits plan, through your insurance company, or through a bank or financial institution that offers them.
  • Once you leave a job or change insurance, the HSA stays yours — you keep the money and can continue to use it for medical expenses for the rest of your life.

Who can open an HSA right now

The main requirement is that you must be enrolled in a high-deductible health plan (HDHP). An HDHP is a specific type of insurance with a higher deductible than standard plans — meaning you pay more out of pocket before insurance starts paying — but usually lower monthly premiums. If your plan is labeled as an HDHP, you are may be able to access. If it is a standard PPO, HMO, or other plan type, you are not.

You also cannot be covered by any other health insurance at the same time, with a few exceptions. If you have Medicare, you cannot open an HSA. If you are claimed as a dependent on someone else's tax return, you cannot open one. But if you have only an HDHP and no other coverage, you are may be able to access.

The easiest way to check: look at your insurance card or the paperwork from your employer. If it says "high-deductible health plan" or "HDHP," you can open an account. If you are unsure, call your insurance company and ask directly.

Where to open an HSA

You have three main routes. The first is through your employer, if they offer one. Many larger employers set up HSAs as part of their benefits package, and they may even contribute money to your account as part of your compensation. If your employer offers one, this is usually the simplest path — you enroll during open enrollment, and contributions come straight from your paycheck.

The second route is through your insurance company. If you buy an HDHP on your own (not through an employer), your insurance company can often direct you to an HSA provider or offer one themselves. Call the customer service number on your insurance card and ask where to open an HSA.

The third route is through a bank, credit union, or financial services company that offers HSAs. Companies like Fidelity, Lively, HealthEquity, and others provide HSA accounts directly to individuals. You can search online for "HSA providers" and compare their fees, investment options, and customer service. This route gives you the most choice in where your money is held, but you are responsible for setting up contributions yourself — they do not come automatically from payroll.

How much you can contribute and when

The amount you can contribute changes each year based on inflation. For 2024, the limit is $4,150 if you have individual coverage or $8,300 if you have family coverage. These numbers are set by the federal government and announced each fall for the following year. If you contribute through your employer's payroll, the money comes out before taxes, which reduces your taxable income.

You can contribute at any time during the year, but contributions for a specific tax year must be made by the tax filing important date (usually April 15 of the following year). If you enroll in an HDHP partway through the year, you can still contribute a prorated amount for that year. If you leave your job or change insurance, you can continue to contribute to an existing HSA as long as you remain enrolled in an HDHP.

If you are 55 or older, you can contribute an extra $1,000 per year on top of the regular limit. This "catch-up" contribution is available only to people in that age group and is a way to save more for medical expenses in retirement.

What happens to money you do not spend

This is the key difference between an HSA and other medical savings accounts. Money you do not spend on medical care does not disappear. It stays in your account, year after year, and you can use it whenever you need it — even decades later. If you spend $2,000 on medical care in 2024 but contribute $4,150, the remaining $2,150 is still yours in 2025 and beyond.

The money can also grow if you invest it. Many HSA providers let you invest your balance in mutual funds or other investments, similar to a retirement account. Any growth is tax-free as long as you use the money for medical expenses. This makes an HSA a powerful long-term savings tool, especially if you are healthy and do not need to spend the money right away.

You can withdraw money from your HSA for any reason at any time, but if you use it for something other than a may have access to medical expense, you pay income tax on that withdrawal plus a 20 percent penalty. Once you turn 65, the penalty goes away — you can withdraw money for any reason without penalty, though you still pay income tax on non-medical withdrawals. This makes an HSA function like a retirement account after age 65.

How to use your HSA for medical expenses

When you open an HSA, you usually receive a debit card or checkbook that you can use to pay for medical expenses directly. may have access to expenses include doctor visits, prescriptions, dental work, vision care, mental health treatment, and many other health-related costs. You can also reimburse yourself for expenses you paid out of pocket — you do not have to pay with the HSA card at the time of service.

Keep receipts and records of what you spend. The IRS can ask you to prove that withdrawals were for may have access to medical expenses, so documentation matters. Many HSA providers have a list of what counts as a may have access to expense, and you can check with them if you are unsure about a specific cost.

You can also use your HSA to pay for health insurance premiums in certain situations. If you are receiving unemployment benefits, you can use HSA money to pay for health insurance. If you are retired and on Medicare, you can use it to pay Medicare premiums and out-of-pocket costs. These are exceptions to the normal rule that you cannot use HSA money to pay for insurance.

What changes if you switch jobs or insurance

The HSA is yours, not your employer's. If you leave your job, you keep the account and all the money in it. You can continue to use it for medical expenses for the rest of your life. The only requirement is that you remain enrolled in an HDHP to continue making new contributions.

If you switch to a different health plan that is not an HDHP, you can no longer contribute new money to the HSA, but you keep the existing balance and can still withdraw it for medical expenses. If you later enroll in another HDHP, you can start contributing again.

If you move to a different HSA provider, you can transfer your balance without penalty. This is called a "trustee-to-trustee transfer," and it takes a few weeks to process. You do not have to close your old account when ready — some people keep multiple HSA accounts open, though this can make record-keeping more complicated.

Frequently Asked Questions

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

It depends on your spouse's plan. If your spouse has Medicare or a non-HDHP plan, you can still open an HSA as long as you are enrolled in an HDHP yourself. If you are both enrolled in the same family HDHP, you can each open an HSA or open one joint account — check with your provider about the options.

What if I do not use all my HSA money in a year?

You keep it. Unlike a flexible spending account (FSA), there is no "use it or lose it" rule with an HSA. Money rolls over every year and can stay in the account indefinitely. You can spend it on medical expenses whenever you need to, even years later.

Can I use my HSA to pay for gym memberships or vitamins?

Not usually. The IRS has specific rules about what counts as a may have access to medical expense. Gym memberships and general vitamins do not may have access to, even if they support your health. However, a gym membership prescribed by a doctor for a specific medical condition may may have access to — ask your HSA provider for guidance on your situation.

What happens to my HSA if I turn 65?

Your account stays open and you can continue to use it for medical expenses. After 65, you can withdraw money for any reason without the 20 percent penalty, though non-medical withdrawals are still subject to income tax. Many people use HSAs as a supplemental retirement account for this reason.

Do I have to report my HSA on my taxes?

Yes. If you contribute through your employer's payroll, your employer reports it. If you contribute on your own, you report it on Form 8889 when you file your taxes. Your HSA provider sends you a statement each year showing contributions and withdrawals, which you use to complete the form.