How do I Open a Health Savings Account?

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  • Written By: L. Dunne
  • Edited By: Susan Barwick
  • Last Modified Date: 07 December 2019
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A health savings account is like a personal savings account, but you may only withdraw funds for medical-related expenses, or you will be penalized. The first step when attempting to open a health savings account is to determine if you are eligible for this type of account, as not everyone is. You will need to have a high deductible health insurance policy already in place. Explore options and plans available or offered in your area, and have a financial plan in place to fund the account.

Although most do, there are some states throughout the United States that do not allow health savings accounts. Determine if you live in a state that allows them. If your state does not, you will be unable to set one up. In order to open a health savings account you must be under the age of 65 and not receiving Medicare. Review your health status to decide whether the health savings account is the best type option for you. If you are generally healthy with no extensive or chronic medical issues, the savings account may be a good choice.


To qualify to open a health savings account you must not have any other type of health insurance other than a high deductible policy. Generally, if you are unable to meet a high deductible and are in poor health or anticipate growing medical expenses, these types of policies will not fit your needs very well. The high deductible policy is like a safety net, in the event something catastrophic happens and you need extensive care beyond the deductible, your medical expenses will be covered accordingly.

To open a health savings account, you must find a plan. Some employers offer health savings accounts just as they offer other medical benefit plans. Ask your human resources department for information on health savings accounts. You may, however, need to wait until open enrollment to add the plan to your current benefits. If your employer does not offer health savings accounts, you may choose to find an independent account. Check with a local health insurance sales agent or with the National Association of Health Underwriters.

Finally, to open a health savings account you must have the money to fund the account. The money put into the account is yours, and you have total control over it. If you withdraw funds for reasons other than medical expenses a 10 percent fee is assessed, and the government taxes you. The amount of money you are allowed to put in the account varies annually with inflation but is usually around $3,000 US Dollars for individuals. Once you begin receiving Medicare you are no longer able to add money to the health savings account.


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