What Happens to Money I Don't Use from HSA?

When you contribute money to your Health Savings Account (HSA), you may wonder what happens to the funds you don't use. One of the key benefits of an HSA is that the money rolls over from year to year, so you won't lose any unused funds at the end of the year like with a Flexible Spending Account (FSA).

Here's what happens to the money you don't use from your HSA:

• Rolls Over: Unused funds in your HSA carry over from year to year with no expiration date.
• Tax-Free Growth: The money in your HSA grows tax-free, allowing you to save more for future healthcare expenses.
• Portable: Your HSA funds belong to you even if you change jobs or health plans.
• Withdrawal Penalty: If you withdraw HSA funds for non-qualified medical expenses before age 65, you may have to pay taxes and a penalty.

When you make contributions to your Health Savings Account (HSA), it's only natural to wonder about the funds you may not use in a given year. Unlike Flexible Spending Accounts (FSAs), where unused funds can disappear, HSAs are designed for longevity.

Here’s a closer look at what happens to your unused HSA funds:

• Rolls Over: Any money you don’t spend from your HSA simply rolls over to the next year, meaning you can build a healthcare nest egg over time.
• Tax-Free Growth: Your HSA funds grow tax-free, making it a savvy way to save for future medical expenses without worrying about taxes eating into your savings.
• Portable: The funds in your HSA are yours, irrespective of job changes or health plans, providing unparalleled financial flexibility.
• Withdrawal Penalty: Keep in mind that if you withdraw funds for non-qualified medical expenses before age 65, you'll be subject to taxes and a penalty; so it’s best to use your HSA for eligible expenses.