You can open a Health Savings Account if you have a specific type of health insurance

A Health Savings Account (HSA) is only available to people who are enrolled in a High Deductible Health Plan (HDHP). This is a health insurance plan where you pay a larger amount out of your own pocket before your insurance starts to help pay for care. If your insurance plan does not meet the HDHP definition set by the IRS, you cannot open an HSA, even if you want to.

The IRS sets the exact rules for what counts as an HDHP each year, and the thresholds change annually. Your insurance company will tell you whether your plan qualifies. If you are unsure, you can ask your employer's benefits department or call your insurance company directly and ask: "Is my plan an IRS-may have access to High Deductible Health Plan?"

Beyond having the right insurance, there are a few other straightforward requirements. You cannot be claimed as a dependent on someone else's tax return, you cannot be enrolled in Medicare, and you cannot have other health coverage that would disqualify you — such as a spouse's non-HDHP plan or military coverage. Most working people with an HDHP meet these requirements without issue.

Key Takeaways

  • You must be enrolled in an IRS-may have access to High Deductible Health Plan to open an HSA; other insurance plans do not allow one.
  • Your insurance company can confirm whether your plan qualifies as an HDHP in one phone call.
  • You cannot have other health coverage that conflicts with HSA rules, such as a spouse's traditional health plan or Medicare.
  • If you lose HDHP coverage, you can no longer contribute to your HSA, though you can keep the money already in it.
  • Self-employed people and employees can both open HSAs as long as their health plan meets the HDHP standard.

How to check if your plan qualifies

Your health insurance documents will state the deductible amount — the money you pay before insurance starts to help. For 2024, an HDHP deductible must be at least $1,600 for individual coverage or $3,200 for family coverage. The plan also has a maximum out-of-pocket limit (the most you will pay in a year), which must not exceed $4,150 for individual coverage or $8,300 for family coverage. These numbers change each year.

The easiest way to confirm is to contact your insurance company or your employer's benefits office and ask directly whether your plan is IRS-may have access to for HSA purposes. They deal with this question regularly and can answer in minutes. If you have your insurance card or policy documents handy, you can also look for language stating "HSA-may be able to access" or "High Deductible Health Plan."

If you buy insurance through the individual market (not through an employer), some plans are labeled as HSA-compatible and some are not. The marketplace website or the insurance company's website will note which plans allow HSAs. Do not assume a plan with a high deductible qualifies — the IRS rules are specific, and a plan can have a high deductible without meeting all the other requirements.

What disqualifies you from opening an HSA

Having other health coverage at the same time is the most common barrier. If your spouse has a traditional health plan (not an HDHP) and you are covered under it, you cannot open an HSA. The same applies if you have coverage through Medicare, TRICARE (military health coverage), the Veterans Administration, or a health plan from a parent or other person claiming you as a dependent.

Some people have both an HDHP and a separate plan that covers specific things — like dental or vision insurance. Dental and vision plans do not disqualify you from an HSA. However, if you have a second medical plan that covers doctor visits or hospital care, that will block you from opening an HSA.

If you are enrolled in Medicare, you cannot open a new HSA. If you already had an HSA before turning 65 and enrolling in Medicare, you can keep the account and use the money, but you cannot add new contributions once Medicare starts.

Self-employed people and HSA may be able to access

If you are self-employed and buy your own health insurance, you can open an HSA as long as your plan is an IRS-may have access to HDHP. You will buy the plan through the individual market (often called the ACA marketplace) rather than through an employer, but the HSA rules are the same.

Self-employed people sometimes have more flexibility in choosing their plan because they are not limited to an employer's options. You can shop for HDHP plans on the marketplace and compare which ones are labeled as HSA-may be able to access. Once you enroll, you can open an HSA at a bank, credit union, or investment company that offers them.

What happens if you lose HDHP coverage

If you change jobs or your employer switches to a different health plan that is not an HDHP, you can no longer contribute new money to your HSA. However, you do not have to close the account or withdraw the money. The balance stays in the account and you can continue to use it to pay for medical expenses.

This is one of the main advantages of an HSA — the money belongs to you, not your employer. If you leave a job or your coverage changes, the account goes with you. You can keep it invested and growing, or you can use it whenever you have medical costs. There is no important date to spend the money, and there is no "use it or lose it" rule like some other health accounts have.

Opening an HSA once you confirm may be able to access

Once you have confirmed that your health plan is an IRS-may have access to HDHP, you can open an HSA at most banks, credit unions, and investment companies. You do not have to open it through your employer or insurance company, though some employers offer HSAs as a convenience.

You will need to provide your name, Social Security number, and proof of HDHP coverage. Some providers ask you to submit a copy of your insurance card or a letter from your insurance company confirming that your plan qualifies. The process usually takes a few days to a week.

Once the account is open, you can contribute money up to the annual limit set by the IRS. For 2024, the limit is $4,150 for individual coverage or $8,550 for family coverage. These limits also change each year. You can contribute all at once or spread contributions throughout the year.

Frequently Asked Questions

Can I open an HSA if I have a high deductible plan but my employer did not call it an HDHP?

Not necessarily. The plan must meet specific IRS rules beyond just having a high deductible. Call your insurance company or employer benefits office and ask whether the plan is "IRS-may have access to for HSA purposes." That is the only confirmation that matters.

What if my spouse has an HDHP but I do not?

You cannot open an HSA if you are covered under your spouse's non-HDHP plan, even if your spouse has their own HSA. However, if you both have separate HDHP coverage, you can each open your own HSA.

Can I open an HSA if I am on my parent's health insurance?

No. If your parent claims you as a dependent on their tax return, you cannot open an HSA, regardless of what type of plan you are on. Once you are no longer claimed as a dependent, you become may be able to access if you have an HDHP.

Do I lose my HSA money if I change jobs?

No. Your HSA belongs to you, not your employer. If you change jobs or your coverage ends, the money stays in your account. You can keep it there, use it for medical expenses, or move it to another HSA provider.

Can I have an HSA and a Flexible Spending Account at the same time?

No. You cannot have both an HSA and a dependent care FSA at the same time. However, you can have an HSA and a limited-purpose FSA (which only covers dental and vision) together.