How to open an HSA

You open an HSA through a bank, credit union, or insurance company that offers HSA accounts — not through your employer or the government. Your employer may have partnered with a specific provider and may even contribute money to your account, but you are the one who chooses the institution and sets it up.

Start by confirming you are enrolled in a high-deductible health plan (HDHP). Your insurance company or HR department can tell you if your plan qualifies. Then contact the HSA provider directly — either one your employer recommends or one you find on your own — and ask for their account opening process. Most providers let you open an account online in 10 to 15 minutes. You will need your Social Security number, date of birth, and current address.

Once your account is open, you receive an account number and routing number. If your employer contributes to HSAs, give HR your account details so they can deposit money directly. If you are funding it yourself, you can set up automatic transfers from your checking account or make one-time deposits.

Key Takeaways

  • You open an HSA directly with a bank, credit union, or insurance company — not through your employer, even if they contribute money.
  • You must be enrolled in a high-deductible health plan to open or use an HSA; confirm this with your insurance company or HR before starting.
  • The account opening process takes about 15 minutes online and requires your Social Security number, date of birth, and address.
  • If your employer contributes to HSAs, provide them your account number and routing number so they can deposit directly.
  • You can fund an HSA yourself through automatic transfers or one-time deposits from your checking account.

Choosing an HSA provider

Your employer may have already selected a provider for you, in which case opening an account with that provider is usually the simplest path. However, you are not required to use your employer's choice — you can open an HSA with any bank or financial institution that offers them.

When comparing providers, look at three things: monthly fees, investment options, and customer service. Some HSAs charge $2 to $5 per month to maintain the account; others charge nothing. If your balance is small, a monthly fee can eat into your savings. Investment options matter if you plan to invest your HSA money rather than just keep it in a cash account — some providers offer mutual funds or index funds, while others do not. Call or visit the provider's website to see what they offer.

If your employer contributes to your HSA, check whether they have negotiated lower fees with their chosen provider. That discount may make their provider the better choice even if you would normally prefer another one.

Funding your HSA: employer contributions

If your employer offers HSA contributions, they typically deposit money into your account on a regular schedule — often monthly or with each paycheck. The amount varies by employer and by the plan you choose. Some employers contribute a flat amount; others contribute a percentage of your deductible.

To receive employer contributions, you must provide your account number and routing number to your HR or payroll department. Ask them for the specific deadline — some employers require this information by a certain date in order to start contributions in the current year. If you miss the deadline, you may have to wait until the next plan year to receive contributions.

Employer contributions do not count toward your annual income and are not taxed. They also do not reduce the amount you can contribute yourself, as long as your total contributions (employer plus employee) do not exceed the annual limit set by the IRS.

Funding your HSA: your own contributions

You can contribute your own money to your HSA at any time during the year, up to the annual limit. For 2024, the limit is $4,150 for individual coverage and $8,300 for family coverage; these amounts change each year. If you are 55 or older, you can contribute an additional $1,000 per year.

Set up a transfer from your checking account to your HSA account. Most providers let you do this online or through their mobile app. You can make one large deposit, split it into monthly transfers, or contribute whenever you have money available — the timing does not matter as long as you stay within the annual limit.

Keep track of how much you have contributed. If you contribute more than the annual limit, you will owe taxes on the overage plus a 6 percent penalty. Your HSA provider should send you a statement showing your contributions, but it is your responsibility to make sure you do not exceed the limit.

Tax deductions for your contributions

Money you contribute to your HSA is deductible from your taxable income, which means it lowers the amount of income tax you owe. If your employer deducts contributions from your paycheck before taxes, the deduction happens automatically. If you contribute money yourself after taxes have been taken out, you can deduct those contributions when you file your tax return.

To deduct your own contributions on your tax return, you will need Form 8889, which the IRS provides. Your HSA provider will send you a statement showing how much you contributed during the year. Keep this statement with your tax records.

The tax deduction applies only to contributions you make, not to any investment earnings or employer contributions. However, those earnings and employer contributions are also not taxed as long as you use the money for may have access to medical expenses.

What happens if you change jobs or health plans

Your HSA stays with you even if you leave your job or switch to a different health plan. The account is yours to keep. However, you can only make new contributions to an HSA while you are enrolled in a high-deductible health plan. If you switch to a plan that does not may have access to as an HDHP, you can no longer add money to the account, but you can still spend the money that is already there on may have access to medical expenses.

If your new employer offers an HSA, you can keep your old account or open a new one with your new employer's provider. Some people keep multiple HSA accounts; others consolidate by rolling their old account into the new one. Rolling over an account is not taxed and does not count toward your annual contribution limit.

If you are between jobs and lose your HDHP coverage, you have a grace period. You can continue to contribute to your HSA for up to two months after your coverage ends, as long as you were covered by an HDHP for at least one day during that month. After the grace period ends, you cannot contribute again until you re-enroll in an HDHP.

Setting up automatic transfers and tracking spending

Most HSA providers let you set up automatic monthly transfers from your checking account. This removes the need to remember to make deposits and helps you build your HSA balance steadily. You can change or cancel automatic transfers at any time through your provider's website or mobile app.

Keep records of what you spend your HSA money on. You do not have to submit receipts to your provider every time you use the account, but the IRS can ask for proof that your expenses were may have access to medical expenses. Save receipts and statements for at least three years. If you cannot prove an expense was medical, you will owe income tax on that withdrawal plus a 20 percent penalty.

Many HSA providers offer a debit card that you can use at pharmacies and medical offices. Using the card makes it easier to track spending and reduces the paperwork you need to keep. However, you are still responsible for making sure every purchase is a may have access to expense.

Frequently Asked Questions

Can I open an HSA if my employer does not offer one?

Yes. You can open an HSA with any bank or financial institution that offers them, as long as you are enrolled in a high-deductible health plan. You will not receive employer contributions, but you can contribute your own money up to the annual limit and receive the same tax benefits.

What if I miss the deadline to give my employer my account number?

Contact your HR or payroll department and ask if they can still process your account information for the current year. Many employers have flexibility beyond the stated deadline. If they cannot, your employer contributions will start in the next plan year, but you can still contribute your own money to the account immediately.

Can I have more than one HSA at the same time?

You can have multiple HSA accounts, but your total contributions across all accounts cannot exceed the annual limit. If you have more than one account, you are responsible for tracking contributions to each one to avoid going over the limit. Most people keep just one account to simplify record-keeping.

Do I have to use my HSA money every year or do I lose it?

No. HSA money rolls over from year to year and never expires. You can let your balance grow and use it years later. This is different from a flexible spending account (FSA), where unused money is forfeited at the end of the year.

What counts as a may have access to medical expense?

may have access to expenses include doctor visits, prescriptions, dental work, vision care, and many over-the-counter medical items. They do not include cosmetic procedures, gym memberships, or most vitamins. Your HSA provider can give you a full list, or you can check IRS Publication 969 for details.