Can You Have an HSA Without Insurance?

A Health Savings Account, or HSA, is a personal savings account that allows individuals to set aside money for healthcare costs with significant tax advantages. It offers a triple tax benefit: contributions are tax-deductible, the funds grow tax-free, and withdrawals for qualified medical expenses are also tax-free. This structure makes it a useful tool for managing both current and future health-related financial obligations.

The funds in an HSA are not tied to a specific employer; the account is owned by the individual and is completely portable. This means the money remains with you regardless of changes in employment or health insurance. Unlike some other health spending accounts, the balance in an HSA rolls over from year to year, allowing the funds to accumulate and grow through investment options.

HSA Eligibility and Insurance Requirements

To open and contribute to a Health Savings Account, an individual must be enrolled in a High-Deductible Health Plan (HDHP). An HDHP is a health insurance plan with a higher annual deductible than traditional plans, which in turn results in lower monthly premiums. The Internal Revenue Service (IRS) defines the financial parameters for a plan to qualify as an HDHP each year.

For 2025, an HDHP must have a minimum annual deductible of $1,650 for self-only coverage or $3,300 for family coverage. These are the minimum amounts you must pay out-of-pocket for medical services before the insurance plan begins to pay.

In addition to the deductible, the IRS also sets a maximum limit on out-of-pocket expenses. For 2025, these total yearly costs, which include deductibles and copayments, cannot exceed $8,300 for self-only coverage or $16,600 for family coverage. Beyond having qualifying HDHP coverage, other eligibility rules apply, as an individual cannot be enrolled in Medicare or be claimed as a dependent on someone else’s tax return.

Managing an HSA After Losing Insurance Coverage

If you already have an HSA and subsequently lose your High-Deductible Health Plan coverage, the account itself does not disappear. The most immediate consequence of losing HDHP coverage is that you must stop making contributions to the account. Eligibility to contribute is determined on a monthly basis, and you can no longer add new funds for any month you are not covered by a qualifying HDHP.

Even without the ability to contribute, the existing funds in your HSA remain available for your use. You can continue to withdraw money tax-free to pay for qualified medical expenses for yourself, your spouse, and your dependents. Furthermore, the account can continue to grow tax-deferred if your funds are invested, allowing your balance to increase over time.

Using HSA Funds for Medical Expenses

The process of using money from your HSA is independent of your current insurance status. Whether you are covered by an HDHP, a different type of insurance, or have no insurance at all, you can use your HSA funds for “qualified medical expenses” as defined by the IRS in Publication 502. These expenses include a wide range of healthcare services and products, such as:

• Payments to doctors and dentists
• Prescription medications
• Vision care like glasses and contacts
• Hospital services

You can access your funds in a few ways. Many HSA administrators provide a debit card linked directly to the account, which can be used to pay for eligible expenses at the point of service. Alternatively, you can pay for medical costs with personal funds and then reimburse yourself from your HSA. It is important to keep detailed receipts and records of these transactions for tax purposes.

When you use the money for qualified medical expenses, the withdrawal is entirely tax-free and penalty-free. If you withdraw funds for any other reason—a non-qualified expense—the amount will be included in your gross income for the year and subject to ordinary income tax. For individuals under age 65, these non-qualified withdrawals also incur a 20% tax penalty.