Schwab does not offer HSA accounts directly, but you can open one elsewhere and link it to your Schwab bank account

Charles Schwab Bank does not issue or manage Health Savings Accounts (HSAs). However, this does not prevent you from opening an HSA with another provider and using your Schwab checking or savings account to fund it or receive reimbursements.

An HSA is a savings account tied to a high-deductible health insurance plan. Money you put in reduces your taxable income, grows tax-free, and can be withdrawn tax-free for medical expenses. Because HSAs have strict rules about who can open one and what the account can be used for, many banks choose not to offer them. Schwab has made that choice.

If you have a high-deductible health plan through your employer or purchased individually, you can open an HSA with a bank, credit union, or investment firm that does offer them — and then connect it to your Schwab account for transfers.

Key Takeaways

  • Schwab does not issue HSAs, so you will need to open one with a different financial institution if you want to save for medical expenses this way.
  • You can fund an HSA opened elsewhere by transferring money from your Schwab checking account, and you can deposit HSA reimbursements back into Schwab.
  • To open an HSA anywhere, you must be enrolled in a high-deductible health plan and cannot be claimed as a dependent on someone else's tax return.
  • Common HSA providers include Fidelity, Lively, HealthEquity, and some credit unions and regional banks.

Where to open an HSA if you bank with Schwab

Several large financial institutions offer HSAs. Fidelity, for example, offers HSAs with no monthly fees and the option to invest your balance in mutual funds or keep it in cash. HealthEquity and Lively are online-only HSA providers that focus on low fees and straightforward account management. Many regional banks and credit unions also offer HSAs, though their features and fees vary.

When choosing an HSA provider, compare monthly maintenance fees, whether they charge for transfers, and whether you can invest your balance or must keep it in cash. Some providers charge per transaction; others charge a flat monthly fee. A few charge nothing at all if you keep a minimum balance.

Once you open an HSA with another provider, you can link your Schwab account to it. This means you can transfer money from Schwab to fund your HSA, and you can transfer HSA funds back to Schwab if you need to pay a medical bill from your checking account.

How to fund an HSA from your Schwab account

After you open an HSA elsewhere, you will receive account and routing numbers for that HSA. You can then set up a transfer from your Schwab checking account using Schwab's online banking or mobile app. Go to the transfer section, select "external transfer," and enter the HSA account details.

Transfers between banks typically take one to three business days. Some HSA providers also allow you to set up automatic monthly transfers, which can be useful if you want to contribute a fixed amount each month.

Keep in mind that HSA contributions are limited by law. For 2024, the limit is $4,150 if you have self-only coverage or $8,300 if you have family coverage. If your employer contributes to your HSA, that counts toward your limit. You can contribute only during the months you are enrolled in a high-deductible health plan.

What counts as a medical expense you can pay from an HSA

HSA funds can be used tax-free for a wide range of medical, dental, and vision expenses. This includes doctor visits, prescription medications, dental work, eyeglasses, hearing aids, and some over-the-counter items like pain relievers and allergy medicine. You can also use HSA funds to pay your health insurance premiums if you are receiving unemployment benefits.

Expenses that do not count include cosmetic procedures, gym memberships, and most over-the-counter vitamins. If you are unsure whether an expense qualifies, the IRS publishes a full list, and your HSA provider can also answer questions.

One key advantage of an HSA is that you do not have to spend the money in the year you contribute it. Unlike a Flexible Spending Account (FSA), which you lose if you do not use by the end of the year, HSA money rolls over indefinitely. This makes an HSA useful as a long-term medical savings tool.

The difference between an HSA and other Schwab accounts

Schwab offers regular savings accounts, money market accounts, and checking accounts, but none of these have the tax advantages of an HSA. Money you put into a regular Schwab savings account grows with interest, but that interest is taxable income. Money you put into an HSA is not taxable, grows tax-free, and can be withdrawn tax-free for medical expenses.

If you do not have a high-deductible health plan, you cannot open an HSA at all — the IRS requires HSA may be able to access. In that case, a regular Schwab savings account is your option for setting aside money for future medical costs, though without the tax benefits.

Frequently Asked Questions

Can I use my Schwab debit card to pay medical bills and then reimburse myself from my HSA?

Yes. You can pay a medical expense from your Schwab checking account and then transfer money from your HSA to reimburse yourself. Keep your receipt and documentation of the expense in case the IRS asks for proof that the withdrawal was for a may have access to medical expense.

What happens to my HSA if I change health insurance plans?

Your HSA stays with you and the money remains yours, even if you switch to a plan that is not high-deductible. However, you cannot make new contributions once you are no longer enrolled in a high-deductible plan. You can still withdraw money for medical expenses.

Can I open an HSA if my employer offers one but I want to use a different provider?

In most cases, yes. If your employer contributes to an HSA through a specific provider, you can usually open a separate HSA with another provider and contribute your own money. Check your employer's plan documents or ask your benefits administrator whether you can have multiple HSAs at once.

Does opening an HSA with another bank affect my Schwab account?

No. Opening an HSA elsewhere does not change your Schwab account or require you to move any money. You straightforward link the two accounts so you can transfer funds between them when you need to.