Is there a penalty for not using your HSA?

When it comes to Health Savings Accounts (HSAs), many people wonder if there is a penalty for not using the funds within a certain timeframe. The good news is that unlike Flexible Spending Accounts (FSAs), there is no 'use it or lose it' rule with an HSA. This means that the money you contribute to your HSA belongs to you indefinitely and there is no expiration date on when you can use it.

However, if you withdraw funds from your HSA for non-qualified medical expenses before the age of 65, you will be subject to a 20% penalty in addition to paying income taxes on the amount withdrawn. It's important to use your HSA funds for qualified medical expenses to avoid these penalties.

It's a common question among HSA holders: Is there a penalty if I don't use my funds? The reassuring answer is no! Unlike Flexible Spending Accounts (FSAs), Health Savings Accounts (HSAs) allow you to keep your contributions without any expiration date. Your money is yours to manage, whether you choose to use it now or save it for future medical needs.