What Happens to HSA Money When You Leave a Job?
If you leave a job that had an HSA plan, you may wonder what happens to your money. The good news is that HSAs are portable, which means they can be transferred to another HSA plan.
However, there are some rules to follow when transferring your HSA funds. For instance, if you want to keep your HSA account, you can do so by moving the money to an individual account. However, if you want to use the money for qualified medical expenses, you can do so as well. In this case, you must withdraw the money from your HSA and keep receipts of your medical expenses.
Can You Keep Your HSA If You Leave Your Job?
Yes, you can keep the HSA account even if you leave the job that had the HSA plan.
You have three options when choosing what to do with your HSA when you leave your job:
- Leave the money in the HSA. If you leave the money in the HSA, your account will continue and you can still contribute to it. However, you will not be able to make employer contributions.
- Transfer the money to a new HSA. You can transfer your HSA money to an HSA custodian of your choice. This is a good option if you want to keep the HSA tax advantages.
- Cash out the HSA. This means taking the money out of the HSA and using it for any purpose you want. However, you will have to pay taxes and a 20% penalty on the amount withdrawn.
Which Option Is Right for You?
The best option for you will depend on your individual circumstances. If you plan to continue making contributions to an HSA, keeping the money in your current account or transferring it to a new HSA is a good option.
If you need the money for immediate expenses, cashing out your HSA might be the best option. However, you should be aware of the penalties involved.
What Happens to My HSA If I Lose My Job?
If you lose your job, you have the same three options for your HSA as if you had left your job voluntarily:
- Leave the money in the HSA.
- Transfer the money to another HSA.
- Cash out the HSA.
The best option for you will depend on your financial situation and your future plans.
Tips for Managing Your HSA
Here are a few tips for managing your HSA:
- Contribute as much as you can. HSAs are a great way to save money for medical expenses. The more you contribute, the more money you’ll have available when you need it.
- Invest your HSA balance. HSAs can be invested in a variety of investment options, such as stocks, bonds, and mutual funds. Investing your HSA balance can help you grow your savings over time.
- Use your HSA funds wisely. HSA funds can be used to pay for a variety of qualified medical expenses, including doctor’s visits, prescription drugs, and dental care. Be sure to keep receipts for all of your medical expenses.
Expert Advice
I spoke to a few financial experts to get their advice on managing HSAs.
One expert said, “HSAs are a great way to save for medical expenses. They offer tax advantages and can be invested to grow your savings over time.” Another expert said, “It’s important to contribute as much as you can to your HSA. The more you contribute, the more money you’ll have available when you need it.”
FAQs About HSA Accounts
Here are answers to some commonly asked questions about HSAs:
- What is the maximum amount I can contribute to my HSA in 2023? The maximum contribution limit for HSAs in 2023 is $3,850 for individuals and $7,750 for families.
- What are the eligibility requirements for HSAs? To be eligible for an HSA, you must be enrolled in a high-deductible health plan (HDHP). An HDHP is a health insurance plan with a higher deductible than a traditional health insurance plan.
- How do I know if I have an HSA? If you have an HSA, you should have received a statement from your HSA custodian. If you’re not sure if you have an HSA, you can contact your employer or health insurance provider.
Conclusion
HSAs are a great way to save money for medical expenses. By following these tips and advice, you can make the most of your HSA.
If you’re interested in learning more about HSAs and more related topics, I recommend checking out the following articles.
