What Happens to My HSA If I Change Jobs: Contributions, Transfers, Taxes

If you change jobs, your Health Savings Account goes with you. The balance is your personal property regardless of who opened the account or who put money in, and you can keep spending it on qualified medical expenses at any time. What changes is your ability to add new money: that depends on the health coverage you have at your next job. For 2026, the contribution ceilings are $4,400 for self-only HDHP coverage and $8,750 for family coverage, with an extra $1,000 available if you’re 55 or older.¹²

The Account Is Yours, Employer Money Included

Federal law requires that your interest in an HSA be nonforfeitable.³ That’s the key difference between an HSA and a Flexible Spending Account, where unused money is typically forfeited when you leave. Whether you quit, get laid off, or retire, every dollar in the HSA stays under your control, and that includes contributions your employer deposited. There’s no vesting schedule; employer contributions belong to you the moment they land in the account.

One practical shift after you leave: your former employer may have been paying the account’s administrative fees. Once you’re off the payroll, the custodian can start billing those fees directly to your balance. If the charges bother you, you can move the account to a different provider.

Employer contributions that haven’t posted before your last day are generally lost. Employers deposit on different schedules — some every pay period, some once a year — so check your plan documents to see what has actually hit the account.

Can You Keep Contributing at Your New Job?

You can only make new HSA contributions during months when you have qualifying HDHP coverage and no disqualifying coverage. Without that coverage you keep full access to the existing balance for qualified medical expenses; you just can’t add to it.¹

For 2026, a qualifying HDHP has a minimum annual deductible of $1,700 for self-only coverage or $3,400 for family coverage, and out-of-pocket expenses (excluding premiums) cannot exceed $8,500 self-only or $17,000 family.⁴

Starting January 1, 2026, the One, Big, Beautiful Bill Act broadened what counts as HSA-compatible coverage:

Bronze and catastrophic health plans qualify regardless of whether they meet the traditional HDHP deductible thresholds, whether purchased through the marketplace or outside it.
Qualifying direct primary care arrangements no longer block HSA contributions, and you can use HSA funds tax-free to pay the periodic fees.⁵

If your new employer offers only a traditional PPO or HMO that meets none of these requirements, you can’t make new contributions. The balance still spends normally on qualified medical expenses.

How Much You Can Contribute After a Mid-Year Change

When you don’t have qualifying coverage for the full calendar year, your contribution limit shrinks. The IRS divides the annual limit by 12 and multiplies by the number of months you had qualifying coverage on the first day of each month.¹ So six months of self-only HDHP coverage in 2026 gives you a $2,200 limit — half of $4,400. Anything your employer contributed counts toward the same cap, so subtract those amounts first. Going over the prorated limit triggers a 6% excise tax on the excess for every year it stays in the account.⁶

The Last-Month Rule and Its Catch

The IRS offers an alternative called the last-month rule. If you have qualifying HDHP coverage on December 1, you’re treated as if you had it the whole year and can contribute the full annual amount.¹

The catch is a 13-month testing period running from December 1 of the tax year through December 31 of the following year. If you lose qualifying coverage during that window for any reason other than death or disability, the contributions that exceeded your prorated amount get added to your taxable income, plus a 10% additional tax on the excess.⁷ The rule can help if you start an HDHP job late in the year, but only if you’re confident you’ll keep qualifying coverage through the end of the next year.

Moving the HSA to a Different Provider

You don’t have to leave the account with your former employer’s custodian. Two paths exist for moving the money.

Trustee-to-Trustee Transfer

A direct transfer sends your balance straight from one HSA custodian to another without the funds passing through your hands. The receiving institution gives you a transfer request form, you provide the old account details, and the providers handle the rest. There’s no limit on how many direct transfers you can do, and no tax consequences.¹ Processing usually takes two to six weeks. If the account holds investments, many custodians require you to sell first and transfer the cash; check with both providers before starting so you’re not caught off guard.

Indirect Rollover

With an indirect rollover, the current custodian sends the money to you, and you have 60 days to deposit the full amount into another HSA.³ Miss the 60-day deadline and the whole amount becomes a taxable distribution, plus a 20% additional tax if you’re under 65. You’re also limited to one indirect rollover in any 12-month period. Direct transfers don’t count toward that limit, so the rollover route rarely makes sense unless you need short-term access to the cash.

Using the HSA Between Jobs

The balance can help cover health costs during a gap in employment. HSA funds generally can’t pay insurance premiums tax-free, but there are two exceptions that matter when you’re between jobs:

COBRA continuation coverage premiums can be paid from the HSA tax-free.⁸
Health insurance premiums paid while you’re receiving unemployment compensation also qualify.⁹

Both exceptions apply even if you’re no longer enrolled in an HDHP. Regular qualified medical expenses — doctor visits, prescriptions, dental, vision — remain reimbursable at any time regardless of employment or coverage status.

Tax Forms After a Job Change

Your former custodian issues a Form 1099-SA reporting any distributions from the account, including rollovers. Your new custodian files a Form 5498-SA reporting contributions received and the year-end balance.¹⁰ You report contributions, distributions, and rollovers on Form 8889 with your annual return. If you did an indirect rollover, mark it as a rollover on the form so the IRS doesn’t treat it as a taxable distribution.⁷

State Tax Note for California and New Jersey

Most states follow the federal tax treatment of HSAs, so contributions and earnings escape state income tax as well. California and New Jersey are the exceptions: contributions are subject to state income tax there, and investment earnings inside the account are taxable at the state level. If your job change involves moving into or out of one of those states, factor that into your contribution and investment planning.

1
Internal Revenue Service. Publication 969 (2025), Health Savings Accounts and Other Tax-Favored Health Plans
2
Internal Revenue Service. HSA Limits on Contributions
3
Office of the Law Revision Counsel. 26 USC 223 – Health Savings Accounts
4
IRS. Rev. Proc. 2025-19
5
Internal Revenue Service. Treasury, IRS Provide Guidance on New Tax Benefits for Health Savings Account Participants Under the One, Big, Beautiful Bill
6
Office of the Law Revision Counsel. 26 USC 4973 – Tax on Excess Contributions to Certain Tax-Favored Accounts and Annuities
7
Internal Revenue Service. Instructions for Form 8889
8
IRS. Notice 2004-2
9
Internal Revenue Service. Distributions for Qualified Medical Expenses
10
IRS. Instructions for Forms 1099-SA and 5498-SA