What happens to HSA funds if you leave your employer?

• A. Money rolls over year to year and goes with you if you leave the company
• B. Funds are forfeited after leaving
• C. Funds stay in the employer's control
• D. Funds are taxed immediately upon leaving

Answer: (B)

HSA funds are owned by you and stay with you, not with your employer. The money in an HSA rolls over from year to year, so a balance you’ve accumulated remains available even after you switch jobs. If you leave your employer, you don’t lose the funds you’ve already contributed or the employer contributions that have already been deposited into your account; you can continue to use those funds for qualified medical expenses, and you can keep the account open or transfer it to another provider if you want. Employer contributions may stop once you’re no longer with that employer, but the existing balance stays yours.

The idea that funds are forfeited after leaving doesn’t reflect how HSAs work; the portable, prepaid nature of the account is what makes HSAs valuable. Distributions for non-qualified expenses are subject to taxes, but merely changing jobs doesn’t trigger any immediate tax on the remaining balance.