How to Open and Fund a Health Savings Account

You need a high-deductible health plan first, then choose a bank or financial institution to hold the account

A Health Savings Account (HSA) is a tax-advantaged savings account, but you cannot open one without already being enrolled in a high-deductible health plan (HDHP). Your health insurance provider will tell you whether your plan qualifies — the IRS sets minimum deductible amounts each year, and your plan must meet those thresholds. Once you confirm your plan is HDHP-may be able to access, you can open an HSA through a bank, credit union, or financial services company that offers them.

The setup process itself takes 15 minutes to an hour. You will provide basic information (name, Social Security number, address), choose how much to contribute that year, and decide whether to keep the account as a straightforward savings account or invest the funds. Some employers offer HSAs directly through payroll, which is the fastest route if your workplace plan includes this option. If not, you can open an account independently through any HSA provider.

Key Takeaways

You must be enrolled in a high-deductible health plan to open an HSA; your insurance company can confirm whether your plan qualifies.
You can open an HSA through your employer's payroll system, a bank, a credit union, or a financial services company that offers HSA accounts.
Annual contribution limits are set by the IRS and vary depending on whether you have individual or family coverage; for 2024, the limit is $4,150 for individual coverage and $8,300 for family coverage.
You can contribute through payroll deductions (which reduces your taxable income when ready) or by depositing money directly into the account after opening it.
The account remains yours even if you change jobs or health plans, though you must stay enrolled in an HDHP to continue contributing.

Confirm your health plan meets the HDHP definition

Before you contact any bank or financial institution, verify that your current health insurance plan qualifies as a high-deductible plan. Call your insurance company's customer service line or log into your online account and look for plan documents or a summary of benefits. The IRS updates HDHP thresholds annually, so the minimum deductible amount changes each year. For 2024, an HDHP must have a deductible of at least $1,600 for individual coverage or $3,200 for family coverage. Your plan documents will state your actual deductible clearly.

If your current plan does not meet these thresholds, you cannot open an HSA until you switch to a may have access to plan. Some employers offer multiple health plan options during open enrollment — if yours does, you can request a plan change to an HDHP. If you are self-employed or buying insurance on the individual market, you can search for HDHP options through your state's health insurance marketplace or directly from insurers.

Choose where to open your account

You have three main routes: through your employer's payroll system, through a bank or credit union, or through a dedicated HSA provider. If your employer offers an HSA plan, this is usually the simplest option because contributions come directly from your paycheck before taxes are withheld. Your employer will give you the name of the HSA administrator they use — this might be a bank, a financial services company like Fidelity or Lively, or a dedicated HSA platform.

If your employer does not offer an HSA, you can open one independently. Major banks (Chase, Bank of America, Wells Fargo) offer HSAs, as do many credit unions and online banks. Dedicated HSA providers like Fidelity, Lively, HealthEquity, and Optum also accept individual accounts. Compare the options based on account fees (some charge annual maintenance fees, others do not), investment options if you plan to invest the money, and ease of use. You do not need to open an account with the same bank where you have your checking account — choose based on the HSA features that matter to you.

Gather the documents and information you will need

When you open an HSA, you will need your Social Security number, a government-issued ID, your current address, and information about your health plan. Have your insurance card or plan documents handy so you can provide your plan name and policy number. If you are opening the account through your employer, your HR or benefits department will handle some of this information for you.

You will also need to decide how much to contribute for the year. The IRS sets annual limits, and you can contribute up to that limit regardless of how much you earn. For 2024, the limit is $4,150 for individual coverage or $8,300 for family coverage. You do not have to contribute the maximum — you can contribute any amount up to the limit. If you are opening the account partway through the year, you can still contribute the full annual amount, though some people choose to contribute a prorated amount instead.

Set up contributions through payroll or direct deposit

If you are opening an HSA through your employer, you will elect a contribution amount during the enrollment process, and that amount will be deducted from your paycheck before taxes are calculated. This is the most tax-efficient way to contribute because the money never counts as taxable income. Your employer sends the contributions directly to the HSA provider on your behalf, usually monthly or per paycheck.

If you are opening an HSA independently, you can deposit money into the account yourself. You can set up automatic transfers from your bank account, make one-time deposits, or both. Unlike payroll contributions, money you deposit yourself does not reduce your taxable income automatically — you will need to claim the deduction on your tax return when you file. Some people find it easier to contribute through payroll even if they open the account independently; ask the HSA provider whether they accept payroll deductions from your employer even though you opened the account outside the employer's system.

Understand what happens to the account if you change jobs

Your HSA belongs to you, not your employer. If you leave your job, the account stays open and the money remains yours. You can continue to use the funds for may have access to medical expenses for the rest of your life. However, you can only make new contributions to the account while you are enrolled in an HDHP. If your new job offers an HDHP, you can continue contributing. If it does not, you can keep the account open and spend down the existing balance, but you cannot add new money until you enroll in another HDHP.

When you change jobs, contact your HSA provider and let them know your employment status has changed. Some providers will ask you to update your information or confirm that you still have HDHP coverage. If your new employer uses a different HSA provider, you can transfer your existing balance to the new account through a trustee-to-trustee transfer, which takes one to two weeks and does not trigger any tax consequences.

Know the rules about using the account

Once the account is open and funded, you can use the money to pay for may have access to medical expenses — these include deductibles, copayments, coinsurance, prescription medications, dental work, vision care, and many other health-related costs. The IRS publishes a list of what counts as a may have access to expense. You can pay for expenses for yourself, your spouse, and your dependents, even if they are not covered by your HDHP.

You can withdraw money from the account by writing a check, using a debit card that the provider issues, or requesting a transfer to your bank account. Keep receipts for all medical expenses you pay with HSA funds — you do not need to submit them when you withdraw the money, but the IRS can ask for proof that the expenses were may have access to if you are ever audited. Money you do not spend in a given year rolls over to the next year; there is no "use it or lose it" important date like there is with flexible spending accounts.

Frequently Asked Questions

Can I open an HSA if I am on Medicare?

No. Once you enroll in Medicare, you are no longer may be able to access to contribute to an HSA. If you already have an HSA, you can keep it and continue to spend the money on may have access to medical expenses, but you cannot add new contributions. You should stop contributing at least one month before you enroll in Medicare to avoid IRS penalties.

What if my employer changes HSA providers mid-year?

Your employer will notify you of the change and provide instructions for transferring your balance to the new provider. This is a trustee-to-trustee transfer, meaning the money moves directly between providers without you touching it. The process usually takes one to two weeks, and you can continue using your account during the transfer.

Do I have to invest the money in my HSA, or can I just leave it in savings?

You can do either. Most HSA providers offer both a savings option (where the money earns minimal interest) and investment options (stocks, bonds, mutual funds). If you do not choose an investment option, the money typically stays in a savings account by default. You can change your choice at any time.

What happens to my HSA if I do not use it for medical expenses?

The money stays in the account indefinitely. Unlike a flexible spending account, there is no important date to spend the funds. You can let the balance grow year after year and use it whenever you have may have access to medical expenses. After age 65, you can withdraw money for any reason without penalty, though non-medical withdrawals are taxed as income.

This guide is for general information only and is not medical, financial, legal, or other professional advice. For decisions specific to your situation, consult a qualified professional. See our Editorial Policy.