You need a high-deductible health plan first, then open an HSA through a bank or financial institution

An HSA is not something you request from your insurance company or employer. You open it yourself at a bank, credit union, or investment firm — the same way you would open a checking account or brokerage account. The requirement is that you must be enrolled in a high-deductible health plan (HDHP) at the time you open it and for the entire year you want to contribute money.

Your HDHP is the gateway. Without it, you cannot open an HSA, and if you drop the HDHP mid-year, you cannot contribute for the rest of that year. The plan itself comes from your employer, the healthcare marketplace, or a private insurer — not from the HSA provider. Once you have the HDHP in place, you can shop for an HSA account at any financial institution that offers them.

The account itself is separate from your health insurance. Your insurance company does not manage it. You manage it, decide where to invest the money, and control how you spend it on medical expenses.

Key Takeaways

  • You must be enrolled in a high-deductible health plan to open an HSA; without one, no financial institution will let you open an account.
  • HSA accounts are opened directly with banks, credit unions, and investment firms — not through your employer or insurance company, even if they offer one.
  • You choose where to open your account based on fees, investment options, and customer service; different providers charge different amounts to maintain the account.
  • Once open, you fund the account yourself through payroll deduction (if your employer offers it) or by depositing money directly, up to the annual limit set by the IRS.
  • Money in an HSA rolls over year to year and belongs to you; you keep the account even if you change jobs or health plans.

Confirming your health plan meets HSA requirements

Before you contact a bank, verify that your plan is actually a high-deductible health plan. The IRS sets minimum deductibles and maximum out-of-pocket limits each year, and they change annually. For 2024, an HDHP for individual coverage must have a deductible of at least $1,600 and out-of-pocket maximum of no more than $8,050. For family coverage, the deductible must be at least $3,200 with an out-of-pocket maximum of no more than $16,100. These numbers shift each year.

Your insurance documents will state the deductible and out-of-pocket maximum clearly. If you are unsure, call your insurance company or check your plan documents online. Some plans marketed as "high-deductible" do not actually meet IRS standards for HSA may be able to access — the name alone does not may have access to you. You need the actual numbers to match.

If you are buying coverage through your employer, ask the benefits department whether the plan is HSA-may be able to access. If you are shopping on the healthcare marketplace, the plan details will note HSA may be able to access. If you have coverage through a spouse's employer, you can still open an HSA as long as that plan qualifies.

Where to open an HSA account

Banks, credit unions, and investment firms all offer HSA accounts. Large national banks include Fidelity, Lively, HealthEquity, and Optum Bank. Smaller regional banks and credit unions often offer them too. You can search for HSA providers in your state through the HSA Council directory or by calling your bank directly and asking whether they offer HSA accounts.

Each provider charges different fees. Some charge a monthly maintenance fee (typically $2 to $5), some charge per transaction, and some charge nothing if you maintain a minimum balance. Some offer investment options for the money in your account; others keep it in a savings account earning minimal interest. If you plan to invest the money long-term, you want a provider that offers mutual funds or index funds. If you plan to spend it on medical expenses within the year, a straightforward savings account may be sufficient.

You do not have to use the HSA provider your employer recommends, though many employers do offer one through payroll. You can open an account anywhere and still have your employer deposit money into it through payroll deduction. Some people open an HSA at a low-cost provider like Fidelity for long-term investing, then set up payroll contributions to flow into that account.

Opening the account and providing proof of HDHP enrollment

When you contact a bank or go to their website to open an HSA, you will need to provide proof that you are enrolled in an HDHP. This usually means uploading or mailing a copy of your insurance card, your plan documents, or a letter from your employer confirming HDHP enrollment. Some providers ask you to self-certify that you have an HDHP; others require documentation.

The process takes 5 to 10 business days in most cases. You will receive account details — routing number, account number, and debit card if the provider issues one — once the account is open. Some providers let you start contributing when ready; others wait until they have verified your HDHP status.

If you are opening an account mid-year, you can still contribute, but only up to the remaining portion of the annual limit. The IRS allows a pro-rata calculation: if you open an HSA in July, you can contribute only 6/12 of the annual limit for that year. Some providers calculate this for you; others require you to track it yourself.

Funding your account through payroll or direct deposit

Once the account is open, you fund it by having your employer deposit money through payroll deduction or by depositing money yourself. Payroll deduction is the most common route if your employer offers it. You tell your employer's benefits or payroll department how much to deduct each pay period, and they send it directly to your HSA. This money is deducted before taxes, which lowers your taxable income for the year.

If your employer does not offer payroll deduction, or if you are self-employed, you deposit money yourself using the account's routing and account number, the same way you would fund any bank account. You can also write a check or transfer money from another account. Self-funded contributions are not deducted from your paycheck, but you can deduct them on your tax return when you file.

The annual contribution limit is set by the IRS and changes each year. For 2024, the limit is $4,150 for individual coverage and $8,300 for family coverage. If you are 55 or older, you can contribute an additional $1,000 per year. You cannot contribute more than the limit, and if you over-contribute, you owe taxes and a penalty on the excess.

Using the account to pay for medical expenses

Once money is in your HSA, you can withdraw it to pay for may have access to medical expenses. Most HSA accounts come with a debit card that works like a regular bank card at pharmacies, doctor offices, and hospitals. You can also write a check, transfer money to another account, or request a reimbursement check from the provider.

may have access to expenses include deductibles, copays, coinsurance, prescription drugs, dental work, vision care, mental health treatment, and many other medical services. The IRS publishes a full list of what counts. Over-the-counter medications like ibuprofen and cold medicine do not count unless you have a prescription. Cosmetic procedures do not count. Health insurance premiums do not count, except for COBRA continuation coverage, long-term care insurance, and health insurance you pay while unemployed.

You do not have to spend the money in the year you contribute it. Unlike a flexible spending account (FSA), an HSA does not have a "use it or lose it" rule. Money rolls over year to year and stays in the account indefinitely. This makes an HSA a long-term savings tool — you can invest the money and let it grow, then withdraw it for medical expenses decades later.

What happens if you change jobs or health plans

Your HSA belongs to you, not your employer. If you leave your job, the account stays open and the money stays in it. You keep the debit card and can continue to use the account to pay for medical expenses. You do not lose the money, and you do not have to close the account.

If you switch to a health plan that is not an HDHP, you can no longer contribute to the HSA for that year, but the money already in the account remains yours. You can still withdraw it for may have access to medical expenses. If you later re-enroll in an HDHP, you can resume contributions.

If you change employers and your new employer offers an HSA through a different provider, you can keep your old account open or roll the money into the new one. Rolling over is straightforward: contact the new provider and request a rollover from your old account. The money transfers directly between institutions, and you avoid any tax consequences.

Frequently Asked Questions

Can I open an HSA if my employer does not offer one?

Yes. You can open an HSA at any bank or financial institution that offers them, regardless of whether your employer does. You will still need to be enrolled in an HDHP, and you will fund the account yourself rather than through payroll deduction. Self-funded contributions can be deducted on your tax return.

What if I do not have an HDHP yet?

You cannot open an HSA without one. If you are shopping for health insurance, look for plans labeled as HSA-may be able to access or high-deductible plans. These are available through your employer, the healthcare marketplace, or private insurers. Once you enroll, you can open an HSA when ready.

Do I have to use the HSA provider my employer recommends?

No. You can open an account at any provider and still have your employer deposit money into it through payroll. Some people choose a different provider for lower fees or better investment options. You can also roll money from one provider to another if you change your mind.

What if I withdraw money for something that is not a may have access to medical expense?

You owe income tax on the withdrawal plus a 20 percent penalty. After age 65, the penalty goes away, but you still owe income tax on non-may have access to withdrawals. Keep receipts for all medical expenses you pay with HSA money in case the IRS asks for documentation.

Can I use my HSA if I move to a different state?

Yes. Your HSA is not tied to a state. You can use the debit card, write checks, or request reimbursements from anywhere. If your new state has different tax rules for HSAs, you may owe state taxes on withdrawals, but the account itself remains open and functional.