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How to start an HSA account: what you need to know

Medically reviewed on January 3, 2023 by Jillian Foglesong Stabile, MD, FAAFP. To give you technically accurate, evidence-based information, content published on the Everlywell blog is reviewed by credentialed professionals with expertise in medical and bioscience fields.

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From monthly prescriptions to unexpected emergency room visits, healthcare costs can add up quickly. If your health insurance plan has a high deductible, affording out-of-pocket costs may be difficult at times. But luckily, there’s a solution: health savings accounts (HSAs) [1].

HSAs are tax-sheltered savings accounts created for people with high-deductible health insurance plans (HDHPs). You can use an HSA to set aside money each month for any future medical expense—without paying taxes on that money [1].

Below, we’ll explain HSAs in greater detail and break down the steps for opening an HSA account of your own.

What is an HSA?

An HSA (Health Savings Account) is a special savings account that you can use if you have a high-deductible health insurance plan [1]. By depositing money in your HSA throughout the year, you can have funds ready to go when you need to pay for qualified medical expenses before your deductible is met. All your HSA savings are rolled over each year indefinitely, so if you don’t use up all your savings every year, you can build up quite the nest egg over time [1]. Can you have an HSA and FSA? No, you can't contribute to both accounts in the same year.

The best part is that HSAs come with triple tax advantages [1]. They enable you to make:

  • Tax-free contributions
  • Tax-free withdrawals for healthcare-related expenses
  • Tax-free investments

5 steps for starting an HSA

If you’re wondering how to start an HSA account and enjoy its many benefits, you’ll be happy to know that the process is fairly straightforward—but it does require a few specific steps to ensure you qualify. We’ll walk you through them below.

Step 1: Enroll in an HSA-eligible HDHP

Not all health insurance plans are compatible with HSAs. If you want to use an HSA, you must first enroll in an HSA-eligible HDHP that meets certain minimum deductible and maximum out-of-pocket thresholds. The thresholds are updated every year.

In 2023, the thresholds will be [2]:

  • Minimum deductible:
    • Individuals – $1,500
    • Families – $3,000
  • Out-of-pocket maximum:
    • Individuals – $7,500
    • Families – $15,000

If you’re not enrolled in an HSA-eligible HDHP yet, you can ask your employer to help you find one during your next open enrollment period or research your options on your own online.

Step 2: Make sure you meet the additional qualification criteria

Being enrolled in an HSA-eligible HDHP is the first requirement. But you must also make sure that you [3]:

  • Aren’t covered by another health plan, whether that’s your spouse’s plan, Medicare, TRICARE, or TRICARE for Life.
  • Aren’t claimed as a dependent on another person’s tax return.
  • Aren’t already using a Flexible Spending Account or Health Reimbursement Account.
  • Haven’t used any Veterans Administrations medical benefits during the past three months (unless you meet certain exceptions).

If you meet all these HSA eligibility criteria, you can move on to the next steps.

Step 3: Select an HSA provider

Banks, credit unions, and brokerages all offer HSAs.2 You can choose which financial institution you want to open your account with. If you don’t have one in mind, you can ask your health insurance company if they partner with any HSA providers.

As you compare different HSA providers, pay attention to their [2]:

  • Fees – Some HSA providers charge fees for opening and closing accounts, as well as monthly maintenance fees.
  • Features – From debit cards to online banking capabilities, some HSA providers boast better features than others.
  • Investment options – Investing your HSA money can help it grow tax-free. Some HSA providers make it easy to invest your contributions in stocks, bonds, and funds.

Once you’ve found an HSA provider with the right perks, you can open an account with them online.

Step 4: Start making tax-free contributions throughout the year

As with IRAs and 401(k)s, the IRS sets an annual contribution limit for HSAs. The contribution limit can apply to any money that you or your employer deposit into your account.

In 2023, the maximum contribution amounts for HSAs will be $3,850 for individuals and $7,750 for families [4]. The only exception is if you’re 55 or older. In this case, you can add an additional $1,000 of contributions each year to catch up before retirement.

Step 5: Use your HSA to pay for qualifying medical expenses

As your HSA balance grows, you can tap into it as needed to pay for healthcare expenses. So, what types of expenses qualify? According to the IRS, eligible medical expenses include [5]:

  • Healthcare visits
  • Lab tests and fees
  • Prescribed medications
  • Dental and vision care
  • Medical treatments
  • Medical equipment

Thanks to the CARES Act, telehealth services, over-the-counter medications, and feminine hygiene products can be reimbursed using your HSA too [6].

Once you reach the age of 65, you can use your HSA funds to pay for anything you want—you’re no longer limited to using it for qualified medical expenses [4].

Can you open an HSA without a job?

Many people open their HSAs through their employer-sponsored health plans. But what if you don’t have a job? If you’re self-employed or unemployed, you can still open an HSA by following the same steps above. The only difference is that you’ll need to deposit your HSA contribution yourself rather than relying on your employer to take from your paychecks automatically.

Everlywell: convenient at-home lab tests and telehealth visits

As you can see, HSAs are an awesome tool for people who prefer to pay lower premiums each month with an HDHP. HSAs can make these types of health plans more affordable. They can also be used as savvy investment tools for retirement.

If you’re interested in putting your HSA to good use, make sure to check out the at-home lab tests and telehealth services we offer at Everlywell. From hormonal panels to COVID-19 test kits, Everlywell makes it easy to check in on your health from the comfort of your own home.

Are Everlywell tests covered by FSA/HSA?

Can you have an HSA and FSA at the same time?

What can an FSA be used for?


  1. Health Savings Account (HSA) - glossary. Glossary | HealthCare.gov. URL. Accessed December 9, 2022.
  2. What are the benefits of enrolling in HDHPs & Hsas? What are the benefits of enrolling in HDHPs & HSAs? | HealthCare.gov. URL. Accessed December 9, 2022.
  3. Publication 969 (2021), Health Savings Accounts and other tax-favored health plans. Internal Revenue Service. URL. Accessed December 9, 2022.
  4. 26 CFR 601.602: Tax forms and instructions. Internal Revenue Service. URL. Accessed December 10, 2022.
  5. Publication 502 (2021), medical and dental expenses: Internal Revenue Service. Publication 502 (2021), Medical and Dental Expenses | Internal Revenue Service. URL. Accessed December 9, 2022.
  6. IRS outlines changes to health care spending available under cares act. Internal Revenue Service. URL. Accessed December 9, 2022.
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