What to Do with HSA If You Don't Work?

Health Savings Accounts (HSAs) are a great way to save for medical expenses while reducing your taxable income. However, a common question that arises is what to do with an HSA if you don't work anymore. Whether you're transitioning between jobs, retiring, or taking a break, here are some options to consider:

1. Keep Your HSA: You can keep your HSA even if you're no longer working. The funds in your account roll over year after year, and you can continue to use them for qualified medical expenses tax-free.

2. Use HSA for COBRA Premiums: If you're eligible for COBRA after leaving your job, you can use your HSA funds to pay for COBRA health insurance premiums.

3. Pay for Medicare Premiums: Once you turn 65 and enroll in Medicare, you can use HSA funds to pay for Medicare premiums, including Part B and Part D.

4. Reimburse Yourself Later: Even if you're not working, you can keep all your receipts for qualified medical expenses and reimburse yourself from your HSA in the future when needed.

5. Convert to a Retirement Account: After age 65, you can withdraw funds from your HSA penalty-free for non-medical expenses, although they will be subject to income tax. This essentially converts your HSA into a traditional retirement account.

Overall, an HSA can continue to serve as a valuable resource for managing healthcare costs even if you're not actively employed. Be sure to understand the rules and regulations surrounding HSAs to make the most of this financial tool.

Health Savings Accounts (HSAs) are not just functional; they're incredibly beneficial for managing medical expenses even when you're not employed. Keeping your HSA after leaving a job allows you to continue utilizing the tax-free benefits for qualified medical expenses long into the future.