Opening an HSA requires three things: a high-deductible health plan, a bank or financial institution that offers HSA accounts, and proof of your coverage

You cannot open an HSA on your own. Your employer or the health insurance marketplace must first enroll you in a high-deductible health plan (HDHP). Once you have that coverage, you choose a financial institution—a bank, credit union, or investment firm—to hold your HSA. The institution verifies your HDHP enrollment, and you fund the account. The whole process typically takes one to two weeks from the time you submit your application to the financial institution.

The timing matters. You can only open an HSA during the same month you enroll in an HDHP, or in the following month. If you miss that window, you have to wait until the next open enrollment period or until you have a may have access to life event (marriage, birth, loss of coverage, move to a new state).

Key Takeaways

  • You must be enrolled in a high-deductible health plan before any financial institution will open an HSA for you.
  • You have one month after your HDHP coverage starts to open an HSA, or you must wait until the next enrollment period.
  • You choose the financial institution yourself—your employer or insurance company does not assign one—and different institutions have different fees and investment options.
  • You will need your Social Security number, proof of HDHP enrollment (usually your insurance card or enrollment confirmation), and a valid ID to complete the application.

Verify your HDHP coverage before you apply

Your first step is to confirm that your health plan meets the IRS definition of a high-deductible plan. For 2024, an HDHP must have a deductible of at least $1,600 for individual coverage or $3,200 for family coverage. Your insurance company or employer's benefits department can tell you your plan's deductible. You can also check your insurance card or the summary of benefits and coverage (SBC) document your insurer sent you when you enrolled.

If you are shopping on the health insurance marketplace (healthcare.gov or your state's exchange), the plan details page will label may have access to plans as HSA-may be able to access. Not all plans with high deductibles are HSA-may be able to access—some have copays or other features that disqualify them. The marketplace will make this clear in the plan comparison tool.

Once you confirm your coverage is HSA-may be able to access, note the date your coverage began. You have until the end of the following month to open an account. If your coverage started on March 15, you can open an HSA through April 30.

Choose a financial institution and gather your documents

You have hundreds of options: major banks like Fidelity, Lively, and HealthEquity; credit unions; and smaller regional banks. Each charges different fees, offers different investment options, and has different minimum balances. Some charge monthly maintenance fees ($0 to $5 per month is typical). Some charge per transaction or per investment trade. Some require you to keep a minimum cash balance before you can invest the rest.

Compare institutions on three things: total annual fees, whether they let you invest your balance (or if they keep it in cash only), and whether they offer the investments you want (mutual funds, ETFs, or just savings). If you plan to use your HSA only for near-term medical expenses, a cash-only account with low fees may be best. If you are saving for retirement and do not plan to touch the money for years, an institution that lets you invest with low trading costs matters more.

Once you have chosen an institution, gather these documents: your Social Security number, your health insurance card or an enrollment confirmation letter showing your HDHP coverage and the date it began, and a valid government ID (driver's license, passport, or state ID). Some institutions also ask for your employer's name and address if your coverage came through an employer plan.

Complete the application with the financial institution

Most institutions let you apply online. You will enter your personal information (name, address, date of birth, Social Security number), your HDHP details (the insurance company name, your policy number, and coverage start date), and your banking information if you want to fund the account by transfer. Some institutions ask you to upload a photo of your insurance card or a copy of your enrollment letter as proof of coverage.

The application takes 10 to 15 minutes. After you submit it, the institution verifies your HDHP enrollment with your insurance company. This verification step usually takes one to three business days. Once verified, your account is active and you can fund it immediately.

If you applied by mail or in person at a bank branch, the timeline is longer—typically five to seven business days for verification, plus mail delivery time.

Fund your account and set up contributions

After your account is open, you can deposit money in three ways: a one-time transfer from your bank account, automatic monthly transfers, or a check deposited at a branch. If your employer offers HSA contributions through payroll, your employer will send the money directly to your HSA. You do not have to do anything except authorize it during enrollment.

If you are self-employed or your employer does not offer HSA contributions, you fund the account yourself. You can contribute up to $4,150 for individual coverage or $8,300 for family coverage in 2024 (these limits change each year). You can contribute all at once or spread contributions throughout the year. The deadline to contribute for a given tax year is April 15 of the following year.

Once money is in your account, you can use it immediately to pay for may have access to medical expenses. You can also leave it invested and let it grow. Unlike a flexible spending account (FSA), HSA money does not expire—whatever you do not spend this year stays in the account and grows tax-free.

What to do if your employer offers an HSA but you want to use a different institution

Some employers partner with a specific HSA provider and contribute money directly to that account. You are not required to use your employer's chosen institution. You can open an HSA with a different provider and ask your employer to send contributions there instead, or you can keep the employer account and open a second account elsewhere.

If you open a second account, be aware that your total contributions across all accounts cannot exceed the annual limit. If your employer contributes $2,000 to one HSA, you can only contribute $2,150 more to another HSA (for individual coverage in 2024). Track contributions carefully or you will owe taxes and penalties on the overage.

Many people keep their employer's HSA for employer contributions and open a personal account with a lower-fee provider for their own contributions. This works as long as you track the total and do not exceed the limit.

Frequently Asked Questions

Can I open an HSA if I am on 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. If you already have an HSA, you can keep it and withdraw money for may have access to medical expenses, but you cannot add new contributions. If you are approaching Medicare age and want to maximize your HSA, you can contribute a catch-up amount ($1,000 extra for people 55 and older) in the year you turn 65, as long as you enroll in Medicare after that contribution.

What happens if I open an HSA but then switch to a non-HDHP plan?

You can keep the HSA and the money stays in it, but you cannot make new contributions once you are no longer on an HDHP. You can still withdraw money for may have access to medical expenses. If you switch back to an HDHP later, you can resume contributions in the month your new HDHP coverage begins.

Do I need an HSA if I have an HDHP?

No. An HDHP does not require an HSA. However, without an HSA, you cannot get the tax deduction for medical expenses. Most people with HDHPs open an HSA to take advantage of the tax savings, but it is not mandatory.

Can I open an HSA outside of open enrollment?

Only if you have a may have access to life event: you got married, had a child, lost health coverage, moved to a new state, or your employer changed your health plan. You have 60 days from the event to enroll in an HDHP and open an HSA. If you do not have a may have access to event, you must wait until the next open enrollment period.

What if the financial institution I want does not show my insurance company in their system?

Call the institution's customer service line. They can manually verify your coverage by contacting your insurance company directly. This takes longer—usually five to seven business days instead of one to three—but it works. Have your insurance card and policy number ready when you call.