Employees can use HSAs to pay for eligible medical expenses tax-free. To qualify for an HSA, employees must belong to a High Deductible Health Plan (HDHP) and have no coverage from any other health insurance.
Employees with an HSA cannot be eligible for Medicare or claimed as a dependent by someone else.
1. Confirm HSA eligibility first
You must be enrolled in an HSA-qualified High-Deductible Health Plan (HDHP).
For 2025, that generally means:
Minimum deductible:
$1,650 self-only
$3,300 family
No other disqualifying coverage
Not enrolled in Medicare
Not claimed as someone else’s tax dependent
If any of those are off, the HSA door stays closed.
2. Choose where to open the HSA
You have two main paths:
Option A: Through an employer
Many employers partner with an HSA bank or custodian
Contributions can come directly from payroll
Payroll contributions avoid federal income tax and FICA, which is a nice bonus
Option B: Open one on your own
You can open an HSA directly with an HSA custodian, even if your employer doesn’t offer one.
Common HSA providers include:
Fidelity
HealthEquity
HSA Bank
Lively
Optum Bank
You choose the provider, open the account online, and fund it yourself.
3. Open the account
You’ll typically need:
Basic personal info
Proof you’re enrolled in an HSA-eligible plan
A linked bank account (for funding, if opening individually)
Most accounts can be opened in 10–15 minutes.
4. Fund the HSA
You can contribute in several ways:
Payroll deductions (if employer-sponsored)
Direct bank transfers
Lump-sum contributions
2025 contribution limits:
$4,150 self-only
$8,300 family
+$1,000 catch-up if age 55+
You can contribute anytime during the year and up until the tax filing deadline for that year.
5. Use the HSA funds
HSA money can be used for qualified medical expenses, including:
Doctor visits
Prescriptions
Deductibles and coinsurance
Dental and vision care
Some over-the-counter items
Unused funds roll over every year and stay with you even if you change jobs or plans.
6. Invest the balance (optional but powerful)
Many HSA providers allow investing once you hit a minimum balance.
HSAs are often called a triple-tax-advantaged account:
Contributions are tax-free
Growth is tax-free
Withdrawals for qualified medical expenses are tax-free
Used strategically, they can act like a stealth retirement account.
Final tip
If someone has an ICHRA or individual market plan, they can still open and fund an HSA on their own as long as the plan is HSA-qualified. Employer involvement is not required.
If you’d like, tell me:
Employer-sponsored vs individual plan?
State?
Self-only or family coverage?
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