What Happens with Your HSA if You Are Laid Off?

Being laid off can be a stressful time, and you may be wondering about the fate of your HSA (Health Savings Account) in such circumstances. If you find yourself in this situation, here's what you need to know:

When you are laid off, your HSA remains yours. It is a personal account, and the funds in it are not tied to your employer. Therefore, you don't lose your HSA just because you lose your job.

However, there are a few things to keep in mind regarding your HSA after a layoff:

• You can still use the funds in your HSA for qualified medical expenses even after you are laid off. This includes medical bills, prescription medications, and other eligible healthcare expenses.
• If you have a high-deductible health plan (HDHP) through a new employer or through COBRA continuation coverage, you can continue contributing to your HSA.
• If you do not have an HDHP and you withdraw funds from your HSA for non-qualified expenses, you may be subject to penalties and taxes.
• You can also choose to leave your HSA as is and let it grow. There is no time limit for using the funds in your HSA, so you can save them for future medical expenses.

It's important to review your HSA plan documents and understand your options when it comes to managing your HSA after a layoff. Consulting with a financial advisor or tax professional can also provide clarity on the best course of action for your specific situation.

If you find yourself laid off, it's vital to remember that your Health Savings Account (HSA) belongs to you, regardless of your employment status. Your money remains available to you, and you can continue to utilize it for eligible medical expenses such as doctor visits and prescription drugs.