What Happens to an HSA When You Leave a Job?

Leaving a job can bring about various changes to your benefits, including your Health Savings Account (HSA). When you leave a job, it's essential to understand what happens to your HSA to make informed decisions about your healthcare savings. Here's what you need to know:

1. HSA Ownership: Your HSA is yours to keep, regardless of your employment status. It is a portable account that stays with you even if you change jobs or retire.

2. Contributions: You can no longer contribute to your HSA through payroll deductions once you leave your job. However, you can still make contributions using other means, such as personal deposits.

3. Withdrawals: You can continue to use the funds in your HSA for qualified medical expenses, even after leaving your job. There are no time limits or restrictions on spending the money in your HSA.

4. Rollover Options: When you leave a job, you have the option to leave your HSA with your former employer's chosen custodian or transfer it to another HSA provider of your choice. It's essential to compare fees and investment options before making a decision.

5. COBRA Coverage: If you opt for COBRA coverage after leaving your job, you can use your HSA funds to pay for qualified medical expenses while you are enrolled in COBRA.

6. Tax Implications: It's crucial to understand the tax implications of withdrawing funds from your HSA, especially if you are no longer using them for qualified medical expenses. Consult with a tax professional to avoid potential penalties.

Overall, your HSA remains a valuable tool for saving and paying for healthcare expenses, even when you leave a job. By staying informed about your options and responsibilities, you can make the most of your HSA benefits.

When transitioning between jobs, it's important to remember that your Health Savings Account (HSA) is a personal asset that you maintain control over, regardless of your employment situation.