Yes, Charles Schwab offers HSA accounts, but with limits on how you use them

Charles Schwab does not let you open a new HSA (Health Savings Account) directly through their brokerage. However, if you already have an HSA with another provider, you can transfer it to Schwab and invest the money there. Schwab acts as the custodian — the institution that holds and manages the account — but they do not issue the HSA itself or handle the tax paperwork that connects it to your health insurance plan.

This matters because an HSA requires a specific link to a high-deductible health plan (HDHP). Your health insurance company or your employer's benefits administrator sets up that connection. Once the HSA exists and has money in it, you can move it to Schwab if you want more investment options than your original HSA provider offered.

Key Takeaways

  • Charles Schwab will hold and invest an HSA you already own, but cannot open a new HSA for you from scratch.
  • You must first open an HSA through your health insurance provider or employer, then request a transfer to Schwab.
  • Schwab HSA accounts let you invest in stocks, mutual funds, and ETFs, unlike many HSA providers that limit you to savings accounts or money market funds.
  • HSA transfers to Schwab take one to two weeks, and you should confirm your new account is set up before requesting the transfer.
  • You still file HSA tax forms (Form 8889) yourself; Schwab provides the statements you need but does not handle tax reporting to the IRS.

How to move an existing HSA to Charles Schwab

Start by opening a Schwab HSA account online or by phone. You will need your Social Security number, date of birth, and the name of your current HSA provider. Schwab will assign you an account number and send you login credentials.

Next, contact your current HSA provider and request a direct transfer (also called a trustee-to-trustee transfer) to Charles Schwab. Give them Schwab's routing information, which Schwab will provide when you open the account. Do not withdraw the money yourself — a direct transfer avoids tax penalties and keeps the money in HSA status the whole time.

The transfer usually takes one to two weeks. Once the money arrives at Schwab, you can invest it in their brokerage offerings. Until then, it sits in a cash sweep account earning minimal interest.

What you can invest in through a Schwab HSA

A Schwab HSA account gives you access to stocks, ETFs, mutual funds, and bonds — the same investments available in a regular Schwab brokerage account. This is a major difference from many HSA providers, which only offer savings accounts or money market funds that earn very little.

You can also keep some money in Schwab's HSA savings option if you want a portion of your balance to stay liquid and safe. Many people split their HSA between a cash reserve for near-term medical expenses and invested money for long-term growth.

Schwab does not charge account maintenance fees for HSAs, though you will pay standard trading commissions or fund expense ratios depending on what you buy. Check Schwab's current fee schedule before you transfer, since costs can change.

The tax rules that still apply to your HSA at Schwab

Moving your HSA to Schwab does not change the tax rules. You can still withdraw money tax-free for may have access to medical expenses — doctor visits, prescriptions, dental work, vision care, and some other health costs. The IRS publishes a list of what counts.

If you withdraw money for something that is not a may have access to medical expense, you owe income tax on that amount plus a 20 percent penalty. That penalty drops to zero after age 65, though you still owe income tax. Schwab will not stop you from making a non-may have access to withdrawal, so it is your responsibility to track what you spend the money on.

You must file Form 8889 (Health Savings Accounts) with your tax return each year. Schwab sends you a year-end statement showing contributions, withdrawals, and account value, but they do not file the form for you. You or your tax preparer will use that statement to complete Form 8889 and report it to the IRS.

Contribution limits and employer payroll deductions

Your HSA contribution limit depends on your health insurance plan type and whether you have individual or family coverage. These limits change each year. For 2024, the limit is $4,150 for individual coverage and $8,300 for family coverage, but check the IRS website for the current year since these numbers shift annually.

If your employer offers HSA contributions through payroll, that money goes into your original HSA account, not directly to Schwab. After you transfer to Schwab, your employer's contributions will still land in your old account unless you update your employer's benefits system to direct new contributions to your Schwab HSA account. Contact your HR or benefits department to make that change.

If you contribute to your HSA outside of payroll — by depositing money yourself — you can deposit directly to your Schwab HSA account once it is open and funded.

When a Schwab HSA makes sense versus other options

A Schwab HSA is worth considering if you have a large HSA balance and want to invest it for growth rather than leave it sitting in a low-interest savings account. If your HSA has only a few hundred dollars and you use it to pay medical bills each year, the investment options may not matter much to you.

Schwab HSAs also work well if you already bank or invest with Schwab and want everything in one place. You can see your HSA balance alongside your other accounts and manage investments from one login.

However, if your employer's HSA provider offers good investment options and low fees, moving to Schwab might not save you money. Compare the expense ratios on funds you plan to buy, any account fees, and the ease of making contributions before you decide to transfer.

Common issues when transferring to Schwab

One frequent problem is opening a Schwab HSA account but forgetting to request the transfer from your old provider. The account sits empty until you initiate the transfer, and you may miss contribution deadlines or employer matching money in the meantime.

Another issue is updating your employer's payroll system. If your employer contributes to your HSA, they need to know your new Schwab account details. Without that update, new contributions go to your old account, and you have to move them manually later.

Some people also discover that their old HSA provider charges a transfer fee or closing fee. These are usually small (under $50), but ask before you request the transfer so there are no surprises.

Frequently Asked Questions

Can I open a brand new HSA directly with Charles Schwab?

No. Schwab only accepts HSAs that already exist. You must open your HSA through your health insurance provider or employer first, then transfer it to Schwab if you want to. This is because an HSA must be connected to a high-deductible health plan, which only your insurance company can set up.

What happens to my HSA if I leave my job?

Your HSA stays yours — it is not tied to your employer. If you transfer it to Schwab before you leave, it remains at Schwab. If it is still at your employer's HSA provider, you can transfer it to Schwab after you leave. You will need to update your own contributions if you were making them through payroll, since you no longer have that option.

Can I invest my HSA in individual stocks at Schwab?

Yes. Schwab HSA accounts have access to individual stocks, ETFs, mutual funds, and bonds. You can build any portfolio you want, just as you would in a regular Schwab brokerage account. Keep in mind that investing HSA money means it is not immediately available for medical expenses, so many people keep some cash in the account for near-term needs.

Do I have to pay taxes on HSA investment gains?

No. Investment gains in an HSA are not taxed, and you do not owe tax when you withdraw money for may have access to medical expenses. You only owe tax if you withdraw money for non-medical reasons, plus a 20 percent penalty before age 65.

What if I cannot remember my old HSA provider?

Check your last pay stub or tax return — your old HSA provider's name usually appears there. You can also contact your employer's HR department or benefits administrator; they have records of which HSA provider they used. Once you know the name, call them directly to request the transfer to Schwab.