The Basic Rule: You Need a High-Deductible Health Plan

To open an HSA, you must be enrolled in a high-deductible health plan (HDHP) — a specific type of health insurance. The IRS sets the minimum deductible each year. For 2024, that means your plan's deductible must be at least $1,600 for individual coverage or $3,200 for family coverage. Your out-of-pocket maximum cannot exceed $4,050 for individual coverage or $8,050 for family coverage.

You cannot have an HSA if you are covered by any other health insurance that is not an HDHP. This includes Medicare, Medicaid, TRICARE, the Veterans Administration, or a spouse's non-HDHP plan. You also cannot claim the HSA tax deduction if someone else claims you as a dependent on their tax return.

The HDHP requirement is the single gate. If you do not have one, you cannot open an HSA, no matter what your income is or how much you want to save.

Key Takeaways

  • You must be enrolled in a high-deductible health plan with a deductible of at least $1,600 (individual) or $3,200 (family) to open an HSA.
  • You cannot have an HSA if you are also covered by Medicare, Medicaid, TRICARE, VA benefits, or a spouse's non-HDHP insurance.
  • You must be a U.S. citizen or resident alien with a valid Social Security number or Individual Taxpayer Identification Number.
  • You can open an HSA through your employer's plan, a bank, an insurance company, or a financial services provider — the HDHP enrollment does not automatically create the account.

Citizenship and Tax Filing Status

You must be a U.S. citizen or resident alien for tax purposes. You will need a valid Social Security number or an Individual Taxpayer Identification Number (ITIN). Non-residents and undocumented immigrants cannot open an HSA.

You must also file a U.S. tax return (or be required to file one) for the year you want to claim the HSA deduction. If you have no income and are not required to file, you can still open and contribute to an HSA, but you will not receive the tax deduction that year.

Age and Enrollment Timing

There is no minimum age to open an HSA. A parent can open one for a child if the child is covered by an HDHP. However, once you turn 65, you become ineligible to make new contributions — though you can continue to withdraw money from an existing HSA for any reason without penalty (you will just owe income tax on non-medical withdrawals).

You can open an HSA at any time during the year, but your contribution limit for that year is reduced based on when you enroll. If you enroll in an HDHP in July, for example, you can only contribute one-twelfth of the annual limit for each month you are covered (July through December). This is called the pro-rata rule.

How HDHP Enrollment Works

You typically enroll in an HDHP through your employer's health insurance plan during open enrollment or when you first become may be able to access (such as when you start a job). If your employer does not offer an HDHP, you can purchase one directly from an insurance company or through the health insurance marketplace in your state.

Enrolling in an HDHP does not automatically open an HSA. You must take a separate step to open the account itself. Some employers offer HSAs through payroll, in which case you may enroll when you enroll in the HDHP. If not, you will need to open an account with a bank, credit union, insurance company, or financial services provider that administers HSAs.

Who Cannot Have an HSA

You cannot open or contribute to an HSA if you are claimed as a dependent on someone else's tax return, even if you have your own income. This rule applies regardless of your age or whether you have an HDHP.

You also cannot have an HSA if you are covered by any of these: Medicare (Parts A, B, C, or D), Medicaid, TRICARE or other military health coverage, the Veterans Administration, or a health plan from a spouse that is not an HDHP. If you have coverage through multiple employers, only one of those plans can be an HDHP for you to maintain HSA may be able to access.

If you lose HDHP coverage during the year — for example, because you switch to a PPO plan — you can no longer make contributions for the remainder of that year, though you can still withdraw money from your existing balance.

Income Does Not Determine HSA may be able to access

Unlike many government assistance programs, there is no income limit for opening an HSA. A person earning $30,000 per year and a person earning $300,000 per year can both open an HSA if they both have an HDHP. Income only matters for the tax deduction — you must have enough income to benefit from the deduction, but there is no ceiling that disqualifies you.

The only financial requirement is that you have enough money to make a contribution. You can contribute as little as $1 to an HSA, though many providers set their own minimum (often $25 or $100).

Frequently Asked Questions

Can I open an HSA if my spouse has Medicare?

No. If your spouse is on Medicare, you cannot have an HSA, even if you yourself are not yet 65 and have an HDHP. The rule applies to anyone in your household who is covered by Medicare. You would need to wait until your spouse's coverage changes or until you turn 65 yourself.

What if I enroll in an HDHP mid-year?

You can open an HSA and contribute, but your contribution limit is reduced. If you enroll in July, you can contribute only 6/12 of the annual limit (July through December). If you enroll in December, you can contribute only 1/12 of the annual limit. This is the pro-rata rule, and it applies every year you enroll partway through.

Do I need to open an HSA through my employer?

No. If your employer offers an HSA, you can use it, but you are not required to. You can open an HSA with any bank, credit union, or financial services provider that administers them. Some people open accounts elsewhere to have more investment options or lower fees than their employer's plan offers.

Can a self-employed person open an HSA?

Yes, if you purchase an HDHP for yourself. Self-employed people can buy individual or family HDHP coverage through the health insurance marketplace or directly from an insurance company. Once you have the HDHP, you can open an HSA the same way anyone else does.

What happens to my HSA if I lose my HDHP coverage?

You keep the account and the money in it. You simply cannot make new contributions once you lose HDHP coverage. You can withdraw money for medical expenses anytime without penalty. Non-medical withdrawals are taxed as income and subject to a 20 percent penalty if you are under 65.