Do I Need to Close HSA When Empty?

When it comes to Health Savings Accounts (HSAs), one common question that individuals often have is whether they need to close an HSA when it becomes empty. The answer to this question is no, you do not need to close your HSA when it reaches a zero balance. Here's why:

HSAs are unique savings accounts specifically designed to help individuals save for qualified medical expenses both now and in the future. Unlike Flexible Spending Accounts (FSAs), the funds in an HSA roll over year after year and continue to grow tax-free, further accumulating towards your healthcare expenses. This characteristic allows individuals to use their HSA as a long-term healthcare savings tool.

Even when your HSA balance is depleted due to medical expenses or other withdrawals, the account remains open and active. You can continue to use your HSA for future medical costs as long as you remain enrolled in a high-deductible health plan (HDHP) and meet HSA eligibility requirements.

Let's summarize why you do not need to close your HSA when it's empty:

• HSAs do not require a minimum balance to remain open.
• Funds in an HSA continue to accumulate tax-free, even when the account balance is zero.
• An HSA serves as a long-term healthcare savings account, allowing you to save for future medical expenses.

Therefore, rather than closing your HSA when it's empty, you can keep it open and utilize it for any potential future healthcare needs.

Your Health Savings Account (HSA) is designed to be a companion for your healthcare needs, so there's no need to close it just because the balance is at zero. HSAs are unique among savings accounts because they are structured to allow for tax-free growth, making them a valuable tool for your future health expenses.