Health Saving Account

You qualify for an HSA only if you're enrolled in a high-deductible health plan that meets IRS minimums. For 2024, your HDHP must have a minimum deductible of $1,600 for individual coverage or $3,200 for family coverage, and maximum out-of-pocket limits of $8,050 (individual) or $16,100 (family).

First, confirm your HDHP eligibility during open enrollment or when you start a new job. Second, choose where to open your account—through your employer's designated HSA custodian if they offer one (often with employer contributions), or independently through banks like Fidelity, Lively, or HealthEquity.

You can withdraw HSA funds tax-free for IRS-qualified medical expenses: doctor visits, prescription medications, dental and vision care, lab tests, medical equipment, mental health services, and some over-the-counter items with a prescription. Cosmetic procedures, gym memberships, and most vitamins don't qualify.

Once your HSA balance exceeds your typical annual out-of-pocket medical costs (often $2,000-$5,000), invest the excess for long-term growth. Most HSA providers offer mutual funds or ETFs once you reach a minimum threshold, commonly $1,000-$2,000.

Can I have both an HSA and an FSA?

You cannot have a general-purpose healthcare FSA and contribute to an HSA simultaneously. However, you can have a limited-purpose FSA (covering only dental and vision) or a post-deductible FSA (paying expenses only after you meet your HDHP deductible) alongside an HSA.

What happens to my HSA when I die?

If your spouse is the designated beneficiary, the HSA transfers to them as their own HSA with no tax consequences. If a non-spouse inherits it, the account stops being an HSA—the fair market value becomes taxable income to the beneficiary in the year of your death.

Can I use my HSA to pay for my spouse or children's medical expenses?

Do HSA funds ever expire?

No. HSA balances roll over year to year with no "use it or lose it" rule.