Health Savings Accounts: Frequently Asked Questions

What is a health savings account?

An HSA is a tax-advantaged savings account you can only open if you are covered by an HSA-qualified high deductible health plan. You own the account, it is not tied to your employer, and unused money rolls over year after year.

Who is eligible to open one?

You must be covered by an HSA-qualified high deductible plan, have no other disqualifying coverage, not be enrolled in Medicare, and not be claimed as a dependent on someone else’s tax return.

What makes a plan HSA-qualified in 2027?

For 2027 the plan must have a deductible of at least $1,750 for self-only coverage or $3,500 for family coverage, and an out-of-pocket maximum no higher than $8,700 self-only or $17,400 family.

New for 2027: Bronze and minimum-coverage catastrophic plans offered through the exchange are now treated as HSA-qualified high deductible plans. That was not true through 2025, so older guidance you may find elsewhere is out of date.

How much can I contribute in 2027?

$4,500 for self-only coverage and $9,000 for family coverage. If you are 55 or older you can add a $1,000 catch-up contribution.

How does California tax my HSA?

This is the question most sites get wrong. California does not conform to federal HSA law. Your contributions are not deductible on your California return, and interest, dividends and capital gains inside the account are taxable to California every year. Federally the account still works normally. Keep your own records of account earnings, because your HSA custodian will not report them in a California-ready format.

What can I spend the money on?

Qualified medical expenses, paid tax free at the federal level. That includes deductibles, coinsurance, most dental and vision costs and prescriptions, but not your health insurance premiums in most situations.

What if I use it for something else?

A non-qualified withdrawal before age 65 is subject to income tax plus a 20 percent penalty. From age 65 the penalty no longer applies, though the withdrawal is still taxed as income if it is not for a qualified expense.

Can I keep contributing once I am on Medicare?

No. Once you enroll in any part of Medicare you can no longer contribute. You can still spend the balance you have already built up.

Do I lose the money if I change jobs or plans?

No. The account is yours. It moves with you, and the balance carries over indefinitely.

Talk to a licensed California agent

If you want help working out whether an HSA-qualified plan makes sense for you, call (855) 847-7020 or see our California HSA plans, HSA overview and qualified expenses pages.