Can I still make qualified distributions from an HSA (Health Savings Account) if I am no longer eligible to contribute? Otherwise, what happens to any remaining balance in the HSA?

Example: Say I sign up for an HSA when I am eligible (covered under an eligible HDHP and whatnot), make a number of eligible contributions, and then a few years down the road (or even the next year) switch to a non-eligible healthcare plan (non-HDHP). I now (hypothetically) have money sitting in an HSA but I am no longer eligible to contribute. Can I still receive qualified, tax-free distributions from the HSA?

1 Answer 1


This is a question I asked myself while considering an HSA, and I couldn't find any answers, so now that I have one, I'm answering it myself.

I asked a family-friend/investment-banker about it, and he suggested you could only make distributions when on an eligible HDHP, but wasn't completely sure. I was about to post the question here to confirm or contradict his statement when I ran across IRS Publication 969 referenced in another SE question. In it, I found this statement under the 'Distributions From an HSA' heading:

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If you are no longer an eligible individual, you can still receive tax-free distributions to pay or reimburse your qualified medical expenses.

Which indicates that you can still make qualified, tax-free distributions even when you are no longer eligible to contribute. (Unless someone else has evidence to the contrary)

  • 5
    The ability to use the funds months or years after the end of the calendar year, or even after retirement, is one of the strengths of the HSA. Commented Feb 11, 2013 at 20:51
  • I can confirm I used one for distributions after changing to a ineligible non-HDHP, and though I'm not a tax expert, no conflicts arose in TurboTax when I filed my taxes this way (I did some basic research, too.).
    – Nicole
    Commented Feb 12, 2013 at 4:44

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