You can open an HSA if you have a high-deductible health plan and meet IRS income rules

An HSA is available to you only if your health insurance meets the IRS definition of a high-deductible plan. For 2024, that means your deductible is at least $1,600 for individual coverage or $3,200 for family coverage. Your plan's out-of-pocket maximum cannot exceed $8,050 for individual coverage or $16,100 for family coverage. These numbers change yearly.

You also cannot be covered by any other health plan that is not a high-deductible plan, with narrow exceptions for accident coverage, disability insurance, and dental or vision plans. If you are on Medicare, you cannot open an HSA, though you can keep one you already have and withdraw money from it (though withdrawals for non-medical expenses will be taxed). If someone else claims you as a dependent on their tax return, you cannot open an HSA.

The income limits are high enough that most people do not hit them. For 2024, you cannot have modified adjusted gross income above $194,575 if you file as single, or $388,950 if you file as married filing jointly. These limits also change yearly and are published by the IRS in January.

Key Takeaways

  • Your health insurance must be a high-deductible plan with a deductible of at least $1,600 (individual) or $3,200 (family) to open an HSA.
  • You cannot have other health coverage at the same time, except dental, vision, accident, or disability insurance.
  • You cannot be on Medicare or claimed as a dependent on someone else's tax return.
  • You can open an HSA through a bank, credit union, or financial services company — not through your employer, though your employer may offer one.
  • You can open an HSA at any time during the year, but contributions for a tax year must be made by the tax filing important date the following year.

Where to open an HSA account

You do not have to open an HSA through your employer, even if your employer offers one. You can open an account at any bank, credit union, or financial services company that offers HSAs. Common providers include Fidelity, Lively, HealthEquity, and Optum Bank, though many regional banks and credit unions also offer them.

If your employer offers an HSA plan, they may contribute money to it for you or match your contributions. That is a reason to check what your employer offers first — information programs is worth considering. But you are not locked into your employer's provider. You can open your own HSA elsewhere and contribute your own money, or you can move money from an employer HSA to a different provider later.

When you choose a provider, compare the fees. Some charge monthly maintenance fees ($2 to $5 is common), some charge per transaction, and some charge nothing. If your balance is small, a fee-free account matters more. If you plan to invest the money rather than spend it on medical expenses, look at what investment options each provider offers.

What you need to open an account

You will need proof that you have a high-deductible health plan. Most providers ask for your insurance policy number or a copy of your insurance card. Some ask for a letter from your employer or insurance company confirming that your plan qualifies. If you are self-employed and have your own high-deductible plan, you may need to provide your policy documents.

You will also need standard identification to open any financial account: your Social Security number, date of birth, and current address. Some providers ask for a copy of your driver's license or passport. If you are opening the account online, you may be able to verify your identity electronically without uploading documents.

Have your insurance information ready before you start. The process usually takes 10 to 15 minutes online, and your account opens within one to three business days. Some providers let you start contributing before the account is fully open.

Contribution limits and important date

The IRS sets an annual limit on how much you can contribute to an HSA. For 2024, the limit is $4,150 if you have individual coverage or $8,300 if you have family coverage. If you are 55 or older, you can contribute an additional $1,000 per year (called a catch-up contribution). These limits change yearly.

You can contribute money to your HSA at any time during the year. But if you want to deduct a contribution on your tax return for a given year, you must make that contribution by the tax filing important date the following year — usually April 15. For example, contributions for the 2024 tax year must be made by April 15, 2025.

If you open an HSA partway through the year, you can still contribute the full annual amount for that year, as long as you meet the may be able to access rules for the entire year. If you become ineligible (for example, you switch to a non-high-deductible plan), you cannot contribute more money, but you keep the account and can withdraw from it for medical expenses.

How to fund your account

You can fund an HSA by transferring money from your bank account, setting up automatic monthly contributions, or depositing a check. Most providers let you do this online or through their mobile app. Some employers automatically deduct HSA contributions from your paycheck and send the money to your HSA — this is the easiest route if your employer offers it, because the money comes out before taxes.

You can also move money from another HSA to a new one. This is called a rollover or transfer. You can do one rollover per 12-month period without tax consequences. If you move money more than once in 12 months, the second transfer is treated as a withdrawal and taxed as income.

If you receive a refund or bonus, you can contribute that lump sum to your HSA. There is no rule against large single contributions — only the annual limit matters. Some people contribute the full year's limit in January; others spread contributions throughout the year.

What happens if you lose HSA may be able to access

If you switch to a health plan that is not high-deductible (for example, a standard PPO), you can no longer contribute to your HSA. But you keep the account and the money in it. You can withdraw money for medical expenses at any time, and those withdrawals are not taxed. You can also leave the money in the account and let it grow.

If you withdraw money from your HSA for something that is not a may have access to medical expense, you pay income tax on that withdrawal plus a 20% penalty — but only if you are under 65. Once you turn 65, the penalty goes away, though you still pay income tax on non-medical withdrawals. This makes an HSA useful as a retirement savings tool if you do not spend all the money on medical expenses.

If you become ineligible because you are claimed as a dependent, or because your income exceeds the limit, you can still keep your account and use it for medical expenses. The restriction only prevents new contributions.

Frequently Asked Questions

Do I need my employer to open an HSA?

No. You can open an HSA at any bank or financial services company that offers them, regardless of whether your employer does. Your only requirement is that you have a high-deductible health plan. If your employer offers one and contributes money to it, that is a bonus — but you are not required to use it.

Can I open an HSA if I have a high-deductible plan through the marketplace?

Yes. Your plan does not have to come from your employer. As long as it meets the IRS definition of a high-deductible plan, you can open an HSA. Check your plan documents or contact the marketplace to confirm your deductible and out-of-pocket maximum meet the IRS thresholds for the current year.

What if I open an HSA but then switch health plans mid-year?

If you switch to a non-high-deductible plan, you can no longer contribute to your HSA for that year. But you keep the account and any money in it. You can withdraw from it for medical expenses without penalty. If you switch back to a high-deductible plan later, you can resume contributions.

Can I have more than one HSA?

You can have multiple HSA accounts, but your total contributions across all accounts cannot exceed the annual limit. If you open a second account, you must track your total contributions carefully to avoid exceeding the limit and owing taxes and penalties.

How long does it take to start using my HSA after I open it?

Most providers open your account within one to three business days. Some let you start contributing or making purchases before the account is fully activated. Check with your provider about their timeline. If you need the account quickly, ask whether they offer expedited opening.