You need a high-deductible health plan first, then open an HSA with a bank or financial institution

A Health Savings Account (HSA) is a tax-advantaged savings account, but you cannot open one without being enrolled in a high-deductible health plan (HDHP). Your health insurance provider will not automatically create an HSA for you—you have to set one up separately through a bank, credit union, or investment firm. The process takes about 15 to 30 minutes online or over the phone, and you can start contributing immediately after enrollment.

The order matters: enroll in an HDHP first, then open the HSA. If you try to open an HSA without HDHP coverage, the financial institution will reject your application. Once you have both in place, you can contribute money to the account and use it to pay for may have access to medical expenses without paying income tax on those funds.

Key Takeaways

  • You must be enrolled in a high-deductible health plan through your employer, the marketplace, or a private insurer before opening an HSA.
  • You open an HSA directly with a bank, credit union, or investment firm—not through your health insurance company.
  • The financial institution will ask for your Social Security number, proof of HDHP enrollment, and basic personal information.
  • You can contribute up to $4,150 per year if you have self-only coverage, or $8,300 if you have family coverage (amounts vary by year).
  • Contributions made by your employer do not count against your personal contribution limit, so you can receive employer contributions and still contribute your own money.

Confirm your health plan meets HDHP requirements

Before you contact a bank or investment firm, verify that your current health insurance plan qualifies as a high-deductible health plan. The IRS sets minimum deductibles and maximum out-of-pocket limits each year. For 2024, an HDHP for self-only coverage must have a deductible of at least $1,600 and an out-of-pocket maximum of no more than $8,050. For family coverage, the deductible must be at least $3,200 and the out-of-pocket maximum no more than $16,100. These numbers change annually.

Check your insurance card or log into your insurer's website to find your deductible and out-of-pocket maximum. If your plan falls within the IRS limits, you are may be able to access. If your deductible is lower than the minimum or your out-of-pocket maximum is higher than the limit, you cannot open an HSA with that plan. You would need to switch to a may have access to HDHP during open enrollment or a may have access to life event.

Choose a financial institution to hold your HSA

You can open an HSA at most banks, credit unions, and investment firms. Common options include large banks like Chase and Bank of America, online banks like Lively and HealthEquity, and investment platforms like Fidelity and Vanguard. Some employers offer HSAs through a specific provider as part of their benefits package, but you are not required to use your employer's choice—you can open an HSA anywhere that offers them.

Compare accounts based on fees, investment options, and ease of use. Some HSAs charge monthly maintenance fees ($2 to $5), while others waive fees if you maintain a minimum balance. If you plan to invest HSA funds rather than just use them for immediate medical expenses, look for an account that offers low-cost mutual funds or index funds. If you only need to pay current medical bills, a simple savings account with no investment options may be sufficient.

Gather the documents and information you will need

When you contact a financial institution to open an HSA, have the following ready: your Social Security number, proof of HDHP enrollment, your date of birth, and a government-issued ID. Proof of HDHP enrollment can be a copy of your insurance card, a letter from your employer's benefits department, or a screenshot from your insurer's website showing your plan type and deductible. Some institutions accept a simple statement that you are enrolled in an HDHP; others require formal documentation.

If you are self-employed or buying coverage through the health insurance marketplace, you will need to provide your plan documents or a confirmation letter from the marketplace showing your plan type and deductible. If your employer offers an HSA through payroll, you may still need to provide proof of your HDHP enrollment to the financial institution, even if your employer is contributing to the account.

Complete the enrollment process online or by phone

Most financial institutions let you open an HSA online in 15 to 30 minutes. Visit the institution's website, click the HSA option, and fill in your personal information, Social Security number, and HDHP details. You will be asked to confirm your plan type and deductible. The system will verify that your plan meets IRS requirements. If it does, you will receive a confirmation number and your account will be active within one to three business days.

If you prefer to open an account by phone, call the financial institution's HSA department. A representative will walk you through the same questions and may ask you to email or upload proof of HDHP enrollment. Once your account is open, you will receive a debit card, checkbook, or online access to transfer money and pay for medical expenses. Some accounts take a few days to fully activate; others are ready to use immediately.

Set up contributions and understand annual limits

After your account opens, decide how much to contribute each year. The IRS sets annual contribution limits: for 2024, you can contribute up to $4,150 if you have self-only HDHP 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 each year, and the financial institution will notify you of the new limits when they are announced.

If your employer offers an HSA through payroll deduction, your employer contributions count toward your annual limit. For example, if your employer contributes $2,000 and you want to contribute $2,150, your total would be $4,150—at the limit for self-only coverage. You can contribute the remainder through payroll deduction, a direct transfer from your bank account, or a check. Contributions made by January 31 of the following year can be counted toward the previous year's limit if you file taxes by the deadline.

Use your HSA to pay for may have access to medical expenses

Once your account is funded, you can use the money to pay for may have access to medical expenses without paying income tax or the 20% penalty that normally applies to HSA withdrawals. may have access to expenses include deductibles, copayments, coinsurance, prescription medications, dental work, vision care, and mental health treatment. You can also use HSA funds to pay for over-the-counter medications like pain relievers and allergy medicine, but only if you have a prescription or a doctor's note.

Keep receipts for all medical expenses you pay with HSA funds. The IRS can audit your account and ask for proof that withdrawals were for may have access to expenses. If you withdraw money for a non-may have access to expense before age 65, you will owe income tax on the amount plus a 20% penalty. After age 65, you can withdraw money for any reason without the penalty, though you will still owe income tax on non-may have access to withdrawals.

Frequently Asked Questions

What happens to my HSA if I leave my job or change health plans?

Your HSA belongs to you, not your employer. If you leave your job or switch to a non-HDHP plan, you keep the account and the money in it. You can continue to use the funds for may have access to medical expenses. However, you cannot make new contributions once you are no longer enrolled in an HDHP. If you switch to a different HDHP, you can resume contributions immediately.

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. 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. You should stop contributing the month you become may be able to access for Medicare to avoid penalties.

Do I have to use my HSA debit card, or can I pay out of pocket and reimburse myself later?

You can do either. Some people use the HSA debit card to pay medical bills directly. Others pay with a personal credit card or cash and then withdraw money from the HSA later. There is no time limit on reimbursement, so you can pay a medical expense today and withdraw HSA funds to cover it years later. Keep your receipts either way.

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

HSA money rolls over year to year. Unlike a flexible spending account (FSA), there is no "use it or lose it" rule. Money you do not spend stays in your account and earns interest or investment returns. This makes an HSA a long-term savings tool for retirement medical expenses.

Can my spouse and I share one HSA?

No. Each person must have their own HSA. If you and your spouse both have HDHP coverage, you each open separate accounts. If you have family HDHP coverage that includes both of you, you can each contribute up to the family limit ($8,300 for 2024), but the money must be in separate accounts.