6 HSA Myths and What’s Actually True

couple looking at their HSA balance on a laptop

Key takeaways:

There are a lot of misconceptions around HSAs, such as whether the funds roll over each year and whether you can keep your HSA when you change jobs.
Getting some clarity on how HSAs work can allow you to use your account to its full potential.

Health savings accounts (HSAs) are rising in popularity. In 2025, they collectively held about $174 billion in assets compared to about $30 billion in 2015.

But despite higher enrollment, there are still some misunderstandings about how HSAs work. Do funds roll over at year’s end? What happens to your HSA when you leave a job? Can you have an HSA and a flexible spending account (FSA) at the same time?

We'll dispel some common myths about HSAs so you can take full advantage of your account or decide whether to enroll in one during open enrollment.

Myth #1: You have to spend your HSA funds by the end of the year

No, you do not need to spend your HSA funds by the end of the year.

This misconception probably stems from the use-it-or-lose-it nature of FSAs. These funds must be spent by the end of the plan year. However, some employers offer a grace period or let you roll over a portion of unused FSA funds.

Unspent HSA funds, on the other hand, roll over at the end of each year. In fact, you can keep your funds, invest them, and use them in retirement for medical and non-medical expenses (though you’ll pay income tax on non-medical expenses after age 65).

Learn more about the differences between HSAs and FSAs.

Myth #2: You lose your funds if you change jobs or health plans

This is another common cause of confusion around HSAs. The short answer is no, you won’t lose your HSA funds if you change jobs or health plans.

Like the previous myth, this false belief is likely based on mixing up FSA and HSA rules. Your FSA belongs to your employer, so you lose access to your account and your funds when you change jobs.

An HSA belongs to you. That means you keep it (and all the funds in it) when you change jobs or health plans—and even if you become unemployed or self-employed. You can also continue to use your tax-free funds on qualified medical expenses in these scenarios.

However, you must be enrolled in a high-deductible health plan (HDHP) to contribute to your HSA.

See how much your HSA can save you over time with our Tax Savings Calculator.

Myth #3: HSAs only cover doctor’s visits and prescriptions

You can absolutely use your HSA to pay for doctor’s visits and prescription medications. But that’s not the whole story.

Your HSA also covers a wide range of healthcare products and services, including:

A healthcare expense must meet the IRS’s definition of “medical care” to be HSA eligible. That means the expense must be for “the diagnosis, cure, mitigation, treatment, or prevention or disease, or for the purpose of affecting any structure or function of the body.”

See what else qualifies for HSA coverage with our Eligibility List.

Myth #4: You can only spend HSA funds on yourself

Your HSA funds aren’t just for you. You can spend your HSA funds on your spouse and any dependents you claim on your taxes.

You can also use your HSA on anyone you could have claimed as a dependent on your taxes but didn’t because they filed a joint return, earned more than $4,400 during the year, or could claim you or your spouse as a dependent on their return.

These people are eligible for HSA reimbursement even if they aren’t covered under your HDHP. But any expenses they reimburse for must meet the IRS guidelines for medical care outlined above.

Myth #5: An HSA is just a spending account

You can use your HSA funds on many different medical expenses. But you can invest them, too. In fact, any interest or investment gains from your account are tax-free.

You can invest your HSA funds in stocks, bonds, mutual funds, and other common vehicles. Just know that you may have to pay a fee to invest your funds, and many HSA administrators require you to have a minimum balance in your account before you can invest.

Myth #6: You can’t have an HSA and an FSA at the same time

Our last myth is partly true.

You can’t contribute to an HSA if you have a standard FSA. But you can contribute to an HSA if you have a limited purpose FSA (for dental and vision expenses) or a dependent care FSA (for childcare or eldercare expenses).

Since the latter two FSA accounts aren’t used for medical expenses, they can be held and contributed to alongside an HSA.

You can also have more than one HSA at a time. Just remember the annual contribution limit applies to all your HSAs combined—not to each one separately.

In summary

Now that you’re armed with the facts on HSAs, you can hopefully enjoy the full benefits of your account or make an informed decision about whether to sign up for one during open enrollment.

Looking for more ways to unlock the power of your HSA? Visit our Learning Center.

FAQs

What happens to my HSA if I don’t use it all?

If you don’t use your HSA, any money in the account will continue to roll over year after year. You can use the tax-free funds at any time on eligible healthcare expenses or invest them.

Keep in mind that some employers will contribute to your HSA through flat or matching contributions. So if you choose not to contribute to your account, you may essentially be leaving money on the table.

Can I cash out my HSA when I leave my job?

Your HSA belongs to you. So you keep any money in the account when you change jobs or leave a job.

If you take money out of your account for non-qualifying expenses before age 65, you’ll pay a 20% penalty on the amount you withdraw plus income taxes.

Can I change my HSA contribution at any time?

Yes. Unlike an FSA, you can change your HSA contributions at any time during the year.

You can only change FSA contributions during open enrollment or a qualifying life event.