What Happens to My HSA After I Retire or Quit My Job?

As you near retirement age or consider leaving your current job, you may have questions about what happens to your Health Savings Account (HSA).

When you retire or quit your job, your HSA remains yours to keep, and you can continue using the funds for qualified medical expenses tax-free. However, there are a few things to keep in mind:

• If you have an HSA-eligible high deductible health plan (HDHP) at the time of retirement, you can still contribute to your HSA as long as you are not enrolled in Medicare.
• If you enroll in Medicare, you can no longer contribute to your HSA, but you can still use the existing funds for medical expenses.
• If you withdraw money for non-medical expenses before turning 65, you will incur a 20% penalty and owe income tax on the amount withdrawn.
• After turning 65, you can withdraw funds for non-medical expenses penalty-free, but you will owe income tax on the amount withdrawn.

It's essential to understand the rules and implications of using your HSA after retirement or leaving your job to make the most of this valuable savings tool.

As you approach retirement or think about leaving your job, it’s natural to wonder about your Health Savings Account (HSA) and how it will be impacted by these life changes. Rest assured, your HSA is yours to keep.

You can continue using your HSA funds for qualified medical expenses tax-free even after you retire. It's also important to note:

• If you're still enrolled in an HSA-eligible high deductible health plan (HDHP) when you retire, you can keep contributing to your HSA until you enroll in Medicare.
• Once you become eligible for Medicare, you will have to stop making contributions, but your existing funds will remain available for medical expenses.
• Be cautious: if you withdraw HSA funds for non-medical expenses before you reach 65, a hefty 20% penalty will apply along with income tax obligations.
• Upon reaching 65, non-medical withdrawals can be made penalty-free, but will still be subject to income tax.

Taking the time to understand these regulations can help you maximize your HSA benefits in retirement and ensure you make the most of this financial resource.