What Happens to My HSA Dollars If I Move to a Non-HSA Health Plan?

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Using your HSA after switching plans

When you move to a non-HSA health plan, you have several options for your HSA dollars. First, you can keep the HSA account open and continue using the funds for qualified medical expenses. However, you will no longer be able to contribute to the HSA.

If you decide to switch to a non-HSA eligible plan, you can still use the remaining balance in your HSA for medical expenses without any penalty. Your HSA funds are yours to keep, even if you no longer have an HSA-eligible health plan.

If you find yourself switching to a non-HSA health plan, you might be wondering about your HSA funds. You can keep your HSA account active and use the existing funds for qualified medical expenses, ensuring you don't lose access to this valuable asset.

Penalties and taxes for non-qualified withdrawals

It's important to note that if you withdraw the HSA funds for non-qualified expenses before you turn 65, you will incur a 20% penalty tax. After turning 65, you can withdraw the funds for non-medical expenses penalty-free, but you'll still owe income tax on the amount withdrawn.

Planning before making the switch

Consider your options carefully before making the switch to a non-HSA health plan to make the most of your HSA funds.