5 more answers to top HSA questions Skip to content

5 more answers to top HSA questions

 Note: A previous blog post discussed answers to the top 10 HSA questions. We will continue to bring you answers to top HSA questions.

This post is part of our ongoing series of articles related to the top questions about HSAs. The following questions are popular questions about using an HSA to save.

1. Is it difficult to open an HSA?

No. Due to the tax advantages in an HSA, the IRS has certain eligibility requirements, but they are pretty easy to understand. To open an HSA, you must have an HSA-qualified health insurance plan, which according to the IRS, is a plan with a minimal annual deductible of $1,350 for individuals and $2,700 for families (in 2018). Other requirements include no 'first-dollar' coverage before meeting the deductible (certain preventive care coverage is allowed). Your health insurance carrier can confirm if your plan is eligible for an HSA.

Opening an HSA is as simple as opening any other bank account. Many HSA providers offer a debit card for ease of use at the doctor's office or pharmacy and customer service support to help give direction and guidance. You can open an HSA with HealthEquity by clicking here. Many health plans and employers have streamlined the process for opening an account with HealthEquity.

2. What happens if I change jobs?

Your HSA is portable, and it's yours, even if you change jobs. You keep any funds you or your employer contribute to your HSA, just like a regular savings account. You can make contributions to your HSA as long as you are enrolled in an HSA-qualified plan, but even if you leave your job and unsubscribe from a qualified plan, you can still use your HSA funds to pay for qualified medical expenses tax-free.

3. My spouse and I have HSA plans through our employers, can we both contribute to separate HSAs?

Yes, but beware of contribution limits and admin fees. If both you and your spouse are covered by an HSA-qualified plan and have your own HSAs, you can both contribute separately, but your combined total contributions still cannot exceed the IRS maximum annual contribution limit of $6,900 in 2018.

Taking into account any maintenance or custodial fees, it may make sense for married couples to contribute to just one HSA. However, maintaining two HSAs may make sense for those couples who want to keep their finances separate, or for individuals who are 55 or older, since the catch-up contribution can only be contributed to an account in that individual's name.

4. What happens to my account balance at the end of the year?

If you don't use your entire HSA balance during the year, the money will just roll over to the next year. The great thing about HSAs is that they never expire and the funds carry over year after year. They're yours even if you change jobs or retire.

At age 65, HSAs behave similar to a 401(k). You'll pay the usual income taxes on funds used for non-qualified expenses, but for any qualified medical, dental or vision expenses, the money remains tax-free. With healthcare expenses rising in retirement, HSAs are a great strategy to help cover those expenses.

5. Can I use my HSA for non-healthcare expenses?

HSAs can be used to cover qualified medical expenses for you and your spouse, and any tax dependents, regardless of your spouse or dependents health insurance coverage. But qualified expenses, as defined by the IRS, are not just limited to what you may think of as healthcare expenses. It also includes services like dental and vision, hearing aids, orthopedic shoe inserts, speech therapy and many more. For a list of qualified medical expenses (QME) from HealthEquity, click here.

You can learn more about HSAs by visiting HealthEquity.com/HSAlearn.

Have any questions we missed? Let us know in the comments.

1. HSAs are never taxed at a federal income tax level when used appropriately for qualified medical expenses. Also, most states recognize HSA funds as tax-free with very few exceptions. Please consult a tax advisor regarding your state's specific rules.

2. Investments available to HSA holders are subject to risk, including the possible loss of the principal invested and are not FDIC insured or guaranteed by HealthEquity, Inc.

3. HealthEquity does not provide legal, tax, financial or medical advice.

4. It is the member's responsibility to ensure eligibility requirements as well as if they are eligible for the plan and expenses submitted. One should consult a tax advisor as individual factors and situations vary.

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