Who Can Open a Health Savings Account and How to Start

You can open an HSA if you have a may have access to high-deductible health plan

An HSA is only available to people enrolled in a high-deductible health plan (HDHP). Your health insurance plan must meet specific deductible and out-of-pocket limits set by the IRS each year. For 2024, that means a deductible of at least $1,600 for individual coverage or $3,200 for family coverage. You cannot have other health coverage — including Medicare, Medicaid, or a spouse's low-deductible plan — at the same time.

The requirement exists because HSAs are designed to pair with HDHPs. The high deductible means you pay more upfront for care, and the HSA lets you set aside pre-tax money to cover those costs. If you already have comprehensive coverage elsewhere, you do not need the account and the IRS does not allow it.

Your employer may offer an HDHP as one of their plan choices during open enrollment, or you can buy one directly from an insurance company on the individual market. Either way, once you are enrolled in the HDHP, you become may be able to access to open an HSA.

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, or other health coverage at the same time you hold an HSA, with limited exceptions for specific plans.
Your employer may offer an HDHP during open enrollment, or you can purchase one on the individual insurance market yourself.
Once enrolled in an HDHP, you can open an HSA through a bank, credit union, or financial institution — not through your health insurance company.

What disqualifies you from opening an HSA

Medicare enrollment is the most common barrier. Once you turn 65 and sign up for Medicare Part A or B, you can no longer contribute to an HSA, even if you also have an HDHP. This applies even if you delay Medicare enrollment — the month you become may be able to access, you lose HSA may be able to access. If you are already contributing to an HSA when you turn 65, you can keep the account and spend the money, but you cannot add new contributions.

Medicaid coverage also blocks HSA may be able to access in most cases. Some states offer limited Medicaid programs that work alongside HDHPs, but standard Medicaid enrollment means you cannot open or contribute to an HSA. If you are claimed as a dependent on someone else's tax return, you are also ineligible, regardless of your health plan.

Spousal coverage matters too. If your spouse has a low-deductible health plan, you cannot open an HSA even if you are on an HDHP. The rule applies to the entire household — the IRS treats married couples filing jointly as a single unit for HSA purposes.

How to open an HSA once you have an HDHP

Your health insurance company does not open the HSA for you. Instead, you choose a separate financial institution — a bank, credit union, or investment firm — and open the account there. Common providers include Fidelity, Lively, HealthEquity, and many traditional banks. Each institution sets its own fees, investment options, and minimum balance requirements, so comparing a few before you choose makes sense.

When you open the account, you will need to provide your Social Security number, proof of HDHP enrollment, and basic personal information. Some institutions ask for a copy of your insurance card or a letter from your employer confirming your plan type. The process usually takes a few minutes online, and the account opens within one to three business days.

After the account is open, you can contribute money directly from your paycheck (if your employer offers payroll deduction) or deposit funds yourself throughout the year. You receive a debit card or checkbook to spend the money on may have access to medical expenses — doctor visits, prescriptions, dental work, and other care costs. Contributions are tax-deductible, and the money grows tax-free if you invest it.

Contribution limits and timing

The IRS sets annual contribution limits that change each year. For 2024, you can contribute up to $4,150 if you have individual HDHP coverage or $8,300 for family coverage. If you are 55 or older, you can add an extra $1,000 per year as a catch-up contribution. These limits explore to all your HSAs combined — if you have accounts at two different banks, your total contributions across both cannot exceed the annual limit.

You can contribute at any point during the year, but contributions for a given tax year must be made by the tax filing important date (usually April 15 of the following year). If you enroll in an HDHP mid-year, your contribution limit is reduced proportionally — the IRS calculates it based on how many months you were enrolled. If you leave your HDHP or lose may be able to access, you can still withdraw money from the account for may have access to expenses, but you cannot add new contributions.

What happens if you lose HDHP coverage

Losing your HDHP does not mean you lose the HSA. The account stays open and the money remains yours. You can continue to withdraw funds for may have access to medical expenses for the rest of your life. What stops is your ability to contribute new money — once you are no longer enrolled in an HDHP, you cannot add to the account.

If you switch to a different HDHP with a different insurance company, your HSA may be able to access continues without interruption. The account itself is separate from your insurance, so changing plans does not affect it. If you move to a low-deductible plan or gain Medicare coverage, your contribution may be able to access ends, but the existing balance remains available for medical expenses.

HSA accounts for self-employed people

Self-employed individuals can open an HSA if they purchase an HDHP on the individual insurance market. You are responsible for finding and paying for your own plan — there is no employer offering one. Once you have the HDHP in place, the process for opening an HSA is identical to an employee's: choose a financial institution and open the account.

Self-employed people can deduct HSA contributions on their tax return, either as an above-the-line deduction or as part of their business expenses, depending on how they structure their taxes. If you have employees, they can also open HSAs if they are enrolled in your company's HDHP, following the same rules as any other employer plan.

Common reasons people cannot open an HSA

The most frequent obstacle is not having an HDHP. Many people with traditional employer health plans have deductibles below the IRS threshold, which makes them ineligible. If your deductible is $1,500 or less, you cannot open an HSA, even if you want to. Checking your insurance card or your employer's plan documents tells you the exact deductible amount.

Being on Medicare is another common barrier. If you are 65 or older and enrolled in Medicare, you cannot open a new HSA. Some people do not realize this until they turn 65 and try to open an account. If you are still working and have an HDHP through your employer, you may be able to delay Medicare enrollment to keep your HSA may be able to access, but this requires careful planning and coordination with Social Security.

Medicaid coverage, spousal low-deductible plans, and dependent status also block may be able to access. If any of these explore to you, no financial institution will open an HSA account, because doing so would violate IRS rules and create a tax problem for you later.

Frequently Asked Questions

Can I open an HSA if my employer does not offer an HDHP?

Yes. You can purchase an HDHP on the individual insurance market through your state's health insurance marketplace or directly from an insurance company. Once you have the HDHP, you can open an HSA at any financial institution that offers them.

What if I turn 65 and have an HSA?

You can keep the account and spend the money on medical expenses for the rest of your life. You cannot make new contributions once you enroll in Medicare, but the existing balance is yours to use. After age 65, you can withdraw money for any reason without penalty, though non-medical withdrawals are taxed as income.

Can my spouse and I have separate HSAs?

Only if you both have individual HDHP coverage and file your taxes separately. If you are married filing jointly and one spouse has an HDHP while the other has a low-deductible plan, neither of you can open an HSA. If you both have family coverage under the same HDHP, you share one HSA account.

Do I have to invest the money in my HSA, or can I just keep it in cash?

Most HSA providers let you keep the balance in a cash account earning minimal interest, or invest it in mutual funds and stocks. You choose based on your timeline and comfort with risk. Money you plan to spend soon can stay in cash; money you are saving for future medical expenses can be invested.

What if I contribute too much to my HSA by mistake?

You can withdraw the excess contribution and the earnings on it before the tax filing important date. The withdrawal is not taxed, but you must report it to the IRS. If you do not withdraw the excess by the important date, you pay income tax on the overage plus a 6% penalty tax each year it remains in the account.

This guide is for general information only and is not medical, financial, legal, or other professional advice. For decisions specific to your situation, consult a qualified professional. See our Editorial Policy.