Can You Dip into Your Former HSA Account If You Are No Longer on HSA?

Health Savings Accounts (HSAs) are a valuable financial tool that allows individuals to set aside funds for medical expenses tax-free. But what happens to your HSA account if you are no longer on an HSA-eligible health insurance plan?

Once you are no longer on an HSA-eligible health insurance plan, you can no longer contribute to your HSA account. However, the funds that are already in your HSA account remain yours to use for qualified medical expenses, even if you are no longer on an HSA.

It is important to note that if you use the funds in your HSA account for non-qualified expenses while no longer on an HSA-eligible plan, you will be subject to income tax on the withdrawn amount plus a 20% penalty, unless you are over the age of 65.

Health Savings Accounts (HSAs) serve as an excellent way to save for future health costs, offering substantial tax benefits. If you've transitioned away from an HSA-eligible health insurance plan, you might wonder about your HSA balance. The good news is that even if you're no longer contributing to your HSA, the money already in the account can be utilized for qualified medical expenses without any time limitation.