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Can you have multiple health savings accounts (HSAs)?

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It's possible and common to have multiple HSAs—health savings accounts you can fund to cover qualified medical expenses for yourself, your spouse and your dependent family members. You may have collected them over the years from different employers, or perhaps you and your spouse each have one.

No matter the reason, you are allowed to have multiple HSAs, but the question is whether or not you should. Let's explore the advantages, drawbacks and additional options like consolidation.

Why have an HSA?

An HSA offers many attractive features, starting with reassurance. You can feel confident you'll have money set aside to pay medical bills and other health-related costs not covered by your regular health insurance plan.

Then there are the tax benefits—triple tax benefits, in fact. Not only do you deposit pre-tax (untaxed) dollars in your HSA but you also enjoy tax-free spending on qualified expenses. Plus, you can invest the money in your HSA and earn interest—and your returns aren't subject to income tax.

There are limits, of course, but in 2024, the savings limits will be even higher—the IRS cap on HSA contributions will be $8,300 for a family and $4,150 for an individual, both about a 7% increase from 2023.

Before you can take advantage of an HSA, you first need a high-deductible health insurance plan—one with at least a $1,600 deductible as an individual or $3,200 for your family in 2024.

Clearly, HSAs have a lot of advantages, and these accounts stick with you throughout life changes—once the funds are deposited in an HSA, they're yours. So, should you keep more than one?

Why you might keep multiple HSAs

There are some scenarios where you could use multiple accounts strategically:

  • Your current employer's HSA matches your contributions, while an HSA from a previous employer offers more flexible investment options.
  • You use one HSA for your own expenses and another for your children's.
  • You focus one HSA on near-term spending on medical expenses, and another on longer-term savings for future medical expenses, perhaps in retirement.

Drawbacks to having more than one HSA

For some people, though, multiple HSAs bring disadvantages:

  • It can be difficult to manage multiple accounts. You have to keep an eye on balances, and you must maintain records for each account showing how you spent the funds.
  • Multiple accounts can mean multiple fees. Each account has its own fee structure for actions like opening or closing the account, getting a debit card or transferring money.
  • The yearly cap on contribution limits applies to all of your accounts in total. Your contribution limits don't expand by having more than one HSA.

How to consolidate your HSAs

If you feel like the drawbacks to multiple HSAs outweigh the benefits, you can consolidate your accounts through an HSA rollover, where you move funds from one HSA to another.

Three rollover options are available:

1. Account rollover

This option makes you the middleman. First, you ask for a withdrawal from the HSA you'd like to close. They give you a check, then you deposit the money in your preferred HSA. You must first sell any securities, which could result in capital gains taxes on your state tax bill.

Rollovers are permitted once a year with this method. Also note that if you don't put the check in an HSA within 60 days, the money will be considered a taxable distribution subject to income taxes. You'll also incur a 20% penalty because you didn't use the money for qualified medical expenses.

2. Cash transfer

With this method, you ask your preferred HSA provider to work with your other HSA provider(s) to transfer funds directly to your preferred HSA. Also known as a trustee-to-trustee rollover, this frees you of the responsibility of depositing funds yourself. You simply request the transfer. There's no limit on the amount of times you can use this method.

This is easy if your fund is held in cash, but if it's invested, you must first sell any securities as you would with the account rollover. This won't impact your federal tax bill, but it could impact your state taxes in the form of capital gains.

3. In-kind transfer

Here, you start by contacting the HSA provider who handles the account you want to close. They'll directly transfer your funds, including stocks, bonds and mutual funds, into your preferred HSA. While this can be an excellent option, allowing you to keep your investments, not all providers permit it. There's no limit on the amount of times this transfer can occur.

Finally, be aware that different HSA providers charge different fees. As you're deciding which HSA to keep, remember that lower fees—or no fees—can be a big benefit to your account balance over time.

Should you have multiple HSAs?

While HSAs offer many benefits, multiple accounts can pose challenges that may not pay off over time. If you're overwhelmed by managing all your HSAs, a Thrivent financial advisor can help you decide if you should consolidate HSAs or make the most of multiple accounts.

Thrivent and its financial advisors and professionals do not provide legal, accounting or tax advice. Consult your attorney or tax professional.