When you change jobs to a new employer you leave your old position behind but your health savings account (HSA) comes with you. You retain complete control over it and can keep paying your medical bills with the funds in your account. This is the case whether your HSA was set up through your former employer or whether you opened it yourself at a bank or other financial institution. You can only keep making contributions if your new job has a high-deductible health plan (HDHP).
A financial advisor can offer you additional guidance to help manage an HSA for your specific needs.
What Is an HSA?
An HSA is a special tax-advantaged account you use to pay eligible health costs. Your contributions to the account are subtracted from your current taxable income. This can give you a valuable deduction at tax time and possibly move you into a lower tax bracket. When you withdraw money from the HSA to pay qualified health costs, withdrawals are also free of taxes. Furthermore, you can invest the funds in the HSA and any earnings accumulate tax-free.
Not just anyone can get an HSA. If you are covered by Medicare, for instance, you aren’t eligible for an HSA. Other people can only get an HSA if they have health insurance coverage through a high-deductible health plan (HDHP). These are plans that have higher-than-normal deductibles. For 2024, the minimum deductible for an individual plan is $1,600 (up from $1,500 in 2023) and for a family plan it is $3,200 (an increase of $200 from 2023).
Some employers offer HSAs, but you can also open one yourself at many financial institutions. You can make HSA contributions directly or use a voluntary salary reduction to have your employer divert some of your pay into the account. There are limits on how much you can contribute to an HSA in any given year, but the money stays there and keeps growing until you use it.
HSA Options When Changing Jobs
An HSA is a portable account, meaning it goes where you go. If you leave a job, your HSA comes with you. You can keep withdrawing funds from the account, tax-free, to pay eligible expenses as long as there is money in there. It is yours to keep. You may also have other options for your HSA depending on the situation.
If your new employer offers an HSA, you can open a new HSA through your workplace and start making contributions to it while still keeping your old HSA. Having more than one HSAs can offer some advantages. For example, one HSA may have lower fees while the other has more diverse investment choices. Some employers also make contributions to your HSA in addition to contributions you make through voluntary salary reductions. This is a valuable benefit that can justify opening a new workplace HSA even though you already have an account.
Another option if your employer has an HSA is to rollover your existing HSA, combining it with the new one. One benefit to doing a rollover is that multiple HSAs complicate recordkeeping. Consolidating two HSAs can also save on fees, as many HSA providers charge a monthly maintenance fee per account.
If you are not covered by HDHP insurance at your new employer, you won’t be able to rollover your HSA into a new employer-sponsored one. Nor can you open a new HSA or even keep making contributions to your existing HSA. However, you can always keep your existing HSA and there is no cap on the number of HSAs you can have open. Nor is there a time limit on how long you have the account. And if later on you take a new job or for some other reason become covered by an HDHP, you can resume contributions.
Bottom Line
HSAs are portable tax-advantaged accounts that go with you when you change jobs. This is true whether the HSA was opened through the employer or you opened it yourself at a separate financial institution. If you are covered by HDHP insurance and the new employer offers an HSA, you can roll your existing HSA into a new account. Alternatively, you can open a new HSA at your new employer, or just keep your old HSA. However, you can’t continue contributing to the HSA unless you are still covered by a HDHP insurance.
HSA Tips for Beginners
- A health savings accounts offer a tax-advantaged way to save and invest for future health expenses. A financial advisor can help you make the most of this tool. SmartAsset’s free tool matches you with up to three vetted financial advisors who serve your area, and you can have a free introductory call with your advisor matches to decide which one you feel is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.
- You can estimate the future growth of funds invested in your HSA with the help of SmartAsset’s free, online investment calculator.
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