Your Health Savings Account dollars remain in a bank or trust company, completely separate from your employer or health insurance plan.
Aaron Benway, CFP®, EA
Aug 13 · 3 min read

Nothing, as the money you’ve accumulated remains right where you left it until you either a) use it or b) roll it to another Health Savings Account (HSA) custodian (bank). Note most trust HSA custodians charge an annual fee, in which case the value is likely to go down over time if the money is left in a non-interest (or low interest) bearing checking account (see below).

Recall the dollars contributed to a Health Savings Account are like any other consumer-owned savings account, which a few extra tax advantages. This also means the account will not be closed unless you elect to close it. However, and importantly, if you move to your spouse’s health insurance coverage you will likely lose your ability to continue contributing, and eligibility for an HSA will be determined based on the specifics of this new health plan. The details can be found in IRS Publication 969, Health Savings Accounts and Other Tax-Favored Health Plans.

Also keep in mind that a Health Savings Account attaches to the individual, not a family unit, meaning you cannot roll your funds into your spouse’s account (should they have one). Commingling of funds, like a jointly-owned checking or brokerage account, is not allowed. However, this does not mean you cannot use your HSA to cover medical expenses incurred by your spouse or other tax dependents (see IRS publication referenced above), just that the IRS keeps track of the funds deposited by your social security number.

Finally, recall the HSA can be used for not medical expenses penalty free once the account owner turns 65 years of age. You would still owe ordinary income taxes on any amounts withdrawn for reasons other than health-related ones, but this simply results in the HSA acting like a traditional deferred retirement account, such as an IRA or 401(k). Depending on your current HSA balance you might consider investing in the brokerage feature offered by many HSA custodians to capitalize on long term market appreciation. A financial advisor could help with this decision, as well as how to allocate the funds.

The HSA Coach App. Download for Free in the App Store and Google Play.

Aaron Benway, CFP, EA

Aaron is a Certified Financial Planner (CFP) and IRS Enrolled Agent (EA). He co-founded HSA Coach, a digital tool to educate consumers on HSAs, track health expenses and other documents, and provide individual financial calculators, to help consumers get the most from their HSA and other savings. To help individuals directly with financial planning and wealth management he started AB Financial Planning. Prior to co-founding HSA Coach, Aaron was the CFO of ventured backed fintech startup HelloWallet, acquired by Morningstar. Aaron has an MBA from Harvard Business School and holds an electrical engineering degree from the US Naval Academy.

Aaron Benway, CFP®, EA

Written by

Certified Financial Planner, Enrolled Agent, HSACoach.com, ABFinancialPlanning.com, Fmr — Software CFO, Carlyle Group, HBS, Navy

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