What Happens to HSA When You Leave a Job?

Leaving a job can be a stressful time, especially when it comes to understanding what happens to your Health Savings Account (HSA).

An HSA is a tax-advantaged savings account that you can use to pay for qualified medical expenses. If you have an HSA through your employer and you leave your job, here's what you need to know about what happens to your HSA:

• If you leave your job, your HSA is yours to keep. It is portable, meaning you can take it with you when you change jobs or retire.
• You can continue to use the funds in your HSA for qualified medical expenses, even after you leave your job.
• You can also keep contributing to your HSA on your own if you have a high-deductible health plan (HDHP) with another employer or through an individual plan.
• If you have money left in your HSA when you leave your job, it remains in your account and continues to grow tax-free.
• It's important to note that you cannot contribute to your HSA with pre-tax dollars once you are no longer enrolled in a HDHP.
• If you withdraw money from your HSA for non-qualified expenses before the age of 65, you will incur a 20% penalty in addition to the regular income tax.
• After the age of 65, you can withdraw money from your HSA for any reason without penalty, although you will need to pay income tax on the withdrawals.

Remember, your HSA is a valuable tool for saving for medical expenses, and it is always beneficial to understand how it works, especially when transitioning between jobs.

When you leave a job, understanding the fate of your Health Savings Account (HSA) is essential for your financial future. Remember, the funds in your HSA are yours to keep, which means you can continue to utilize them for qualifying medical expenses even after your employment ends.