Yes. To be eligible for an HSA, individuals must meet the following requirements:

  • be covered by a High Deductible Health Plan (HDHP);
  • NOT be covered by another health plan that is not an HDHP;
  • not be eligible to be claimed as a dependent on another person’s tax return; and
  • not be entitled to Medicare benefits (enrolled in Medicare).

No, but they stand to lose some tax benefits if they are eligible for an HSA and do not open one.

Nationwide statistics reveal that many (up to one-half of those eligible) Americans that are eligible for an HSA do not open one. A likely reason many eligible individuals fail to open an HSA is that they cannot afford to do so.

HSA owners that do not have sufficient funds to fully fund an HSA should consider opening an HSA with just a minimum amount to set the “establishment date.” Individuals cannot use an HSA for any expenses incurred prior to their “establishment date.”

Eligibility is determined on a monthly basis and an individual must be eligible on the first day of the month to be considered eligible for that month.

The key point of the establishment date is that HSA owners can use the HSA to pay for all medical expenses incurred after (but not before) that date.

The "establishment date" rule allows HSA owners to maximize HSA tax benefits by paying for most qualified medical expenses tax-free through their HSA, even in years when the HSA owners’ medical expenses exceed the HSA limits.

Pursuant to many state laws, the HSA must be funded to be considered “established.”

Without researching state laws, a conservative approach is for HSA owners to fund the HSA with a small amount to get it “established.”


Yes. Any person may make an HSA contribution for any other person including family members, employers, even neighbors and strangers. Whether or not the contributor or the HSA owner gets the tax break depends on the relationship.

Employers generally do get a deduction for HSA contributions and spouses that file joint return get the benefit of each other’s contributions.

If someone other than an employer or spouse makes an HSA contribution on behalf of the HSA owner, the HSA owner gets the HSA deduction, not the person who contributed.

Yes. HSA owners may fully fund an HSA up to the contribution limit. If an employer only partially funds the HSA, the employee can contribute the difference up to the limit.

The law allows individuals a one-time transfer of IRA assets to fund an HSA provided:

  • They are eligible for an HSA,
  • and have a permitted IRA with sufficient funds,
  • and have not already completed an IRA to HSA funding distribution,
  • and the names and Social Security numbers are the same on the IRA and HSA.

The amount transferred may not exceed the amount of one year’s HSA contribution limit. The technical term for this transaction is a “qualified HSA funding distribution,” not “transfer.”

A rollover or transfer is a method to move money that is already in an HSA to a different HSA custodian or trustee.

Rollover: A rollover occurs when an HSA owner takes a distribution from an HSA and contributes it to a new HSA custodian within 60 days of the date of that distribution.

The current HSA custodian reports the HSA distribution as a normal distribution on the IRS Form 1099-SA, meaning the HSA owner will owe taxes plus a 20 percent penalty on the amount unless rolled into a new HSA custodian or trustee within 60 days (or the amount distributed is used for qualified medical expenses).

Transfer: A transfer occurs when an HSA owner moves money from a current HSA custodian or trustee to a new HSA custodian or trustee without taking a distribution of the funds. The money moves directly in a “trustee-to-trustee transfer.”

Plus, because the HSA owner never gains direct access to the funds, the two HSA custodians are not required to do any extra IRS reporting on the transaction.

HSA fees vary and the list below is only representative of some of the more common fees:

  • Set-up fee;
  • Annual/monthly administration fee;
  • Check printing fee;
  • Online-banking fee;
  • Account closing fee;
  • Investment fees;
  • Debit card/other transaction fee;
  • Fees for administrative work to correct or replace IRS reporting documents;
  • And more.

HSA fees are more prevalent than fees for other types of accounts because HSAs require additional IRS reporting and can be complex, leading to additional support needs. Support in answering questions is especially needed.

Unlike IRAs, HSAs generally do not enjoy as large balances. HSA balances, however, have grown dramatically over the years and are beginning to reach the levels where fee waiver is making sense and HSA fees have been decreasing.


HSA custodians are allowed to offer a wide range of investments including checking accounts, savings accounts, Certificates of Deposit, money market accounts, stocks, bonds, mutual funds as well as even more exotic choices.

Health savings accounts are considered a smart financial move for employees who want to–and are able to–put aside money for health care expenses or save and invest money to pay for future health care costs in retirement. And the broker, advisor, or employer who hasn’t at least looked into HSAs is missing out on opportunity.

Recently there’s been some decline in employer excitement over high deductible health plans (HDHPs), which are currently required to have an HSA.  Some say HDHPs haven’t fulfilled their promise of making employees savvy consumers of health care while saving employers money. And yet that doesn’t detract from the benefits an HSA can offer an employee, including portability from employer to employer, and the oft-mentioned “triple tax advantage” of HSAs.

We have excerpted the 11 FAQs on the slides above from the book 2019 Health Savings Accounts Facts, by National Underwriter, our colleagues at ALM Media.