Can I open my own health savings account if my employer doesn't offer one?

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Yes, you can open a health savings account (HSA) even if your employer doesn't offer one. But you can make current-year contributions only if you are covered by an HSA-qualified health plan, also known as a high-deductible health plan (HDHP). And you can't be covered by other disqualifying coverage as defined by tax laws, such as Medicare, Medicaid, TRICARE or a spouse's health plan that is not HSA-qualified. Nor can you be eligible to be claimed as a tax dependent in that year.
Contributing to an HSA is worth considering because it can be a powerful savings vehicle as well as a way to help pay for health care costs.
— Edward Shehan, Senior Vice President,
Health Benefit Solutions
Bank of America
First, there are the potential tax advantages. Contributions, up to the annual limit set by the tax laws, can be deducted from your taxable income for federal and most state income tax; any interest and investment earnings in your HSA accumulate federal income tax-free; and withdrawals for qualified healthcare payments remain tax-free.Footnote 1
Then there's the flexibility. Unused funds in the account continue to accumulate from year to year, even if you discontinue coverage in an HSA-qualified health plan. And after age 65, you can withdraw funds from the account for non-medical expenses without paying an additional 20% tax (but the distribution will be subject to ordinary income tax since it is not a qualified healthcare expense).

What are my contribution limits?

For exact limit amounts, refer to our Annual Limits Guide (PDF). If you turn 55 during the tax year or are already 55 or older, you qualify for a catch-up contribution of $1,000 per year.

What expenses can an HSA cover?

HSA funds can be used for:
  • Qualified out-of-pocket medical expenses you incur that are not covered by your health plan
  • Medical, dental or vision coinsurance and co-payments
  • Prescription drugs
  • Prescription eyewear and supplies (eyeglasses, goggles, safety glasses, sports eyewear, sunglasses)
  • Some medical treatments not covered by your insurance, such as visits to a chiropractor
The Internal Revenue Service publishes a list of qualified expenses in Publication 502, Medical and Dental Expenses available at You can begin by reviewing the various healthcare options your employer provides to determine whether an HSA-qualified healthplan might be right for you, if offered. If you decide to enroll in an HSA-qualified health plan, you should also consider opening an HSA and trying to contribute as much as you can up to the annual limit. HSAs are available from a variety of institutions, but it's worth noting that not all HSAs are created equal; some providers have additional fees for the debit card or the investment portion of the account.

Next steps

Bank of America, Merrill, their affiliates and advisors do not provide legal, tax or accounting advice. Clients should consult their legal and/or tax advisors before making any financial decisions.

Footnote 1 Participants can receive federal income tax-free distributions from their HSA to pay or be reimbursed for qualified medical expenses they, their spouses or dependents incur after they establish the HSA. If they receive distributions for other reasons, the amount they withdraw will be subject to federal income tax and may be subject to an additional 20% federal tax, unless an exception applies. Any interest or earnings on the assets in the account are federal income tax-free. Amounts contributed directly to an HSA by an employer are generally not included in taxable income. Also, if participants or someone else make after-tax contributions to their HSA the contribution may be tax deductible. Certain limits may apply to employees who are considered highly compensated or key employees if the employer makes contributions to the HSA or the employee makes contributions through payroll deductions. State tax consequences for HSAs may vary. Individuals should contact qualified tax or legal counsel before establishing an HSA.