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I got a nastygram from my bank because we made >6 withdrawals from our HSA last month.

According to them, the limit of 6 withdrawals is a federal regulation. I'm familiar with this for normal savings accounts. Is this standard practice for HSA's?

They have (what seems to me) an odd structure to the HSA. It's a combination checking+savings. The checking always has a zero balance. We write checks (or use a debit card) from the checking account, and they make an automatic transfer from the savings to the checking to cover withdrawals.

It would seem to make more sense to just have it as a checking account, but maybe there's some regulatory reason they don't do this?

Do other institutions have HSAs structured so that you can make more than 6 withdrawals a month? (A month like this is infrequent but not rare -- if the kids get sick and require a couple of trips to the doctor and the pharmacy we'll easily end up hitting the debit card a few times plus a couple of checks.)

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    The reason for the six withdrawal limit is because it is coming out of a savings account. See "regulation" here. en.m.wikipedia.org/wiki/Savings_account
    – Michael Pryor
    Feb 5, 2011 at 19:47
  • @Michael Pryor - I'm familiar with the limit. Is an HSA always a savings account or could an HSA be set up as checking so that it is not subject to the limit? IOW, is it worth my time to shop for another bank where I won't have to worry about the limit?
    – bstpierre
    Feb 5, 2011 at 21:32
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    From a search I just did, it does appear that there are a bunch of credit unions that offer HSA checking accounts.
    – Michael Pryor
    Feb 6, 2011 at 0:10
  • @Michael Pryor - Thanks. I must have had a mental block yesterday... when I search "hsa checking" I see the checking accounts. If you want to post a real answer I'll mark it accepted.
    – bstpierre
    Feb 7, 2011 at 3:18

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Checking accounts can't pay interest, according to the bizarre and outdated Regulation Q. Under the even more bizarre and outdated Regulation D, you can only transfer money out of savings accounts six times per 4 weeks.

Your HSA account is probably set up the way it is because the bank wants to be able to tell people they'll earn interest on their savings (although I'll betcha the current rate is something like 0.000000000001%). As far as I know, there's no reason an HSA couldn't be a straight checking account. You wouldn't get interest but you would get more than 6 withdrawals per month. Or, you could do the transfers yourself from savings to checking just keep enough money in the checking part of the account so that the automatic transfer doesn't kick in.

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    From the page you linked: "Regulation Q no longer exists as it once did". The way this bank has the account set up, I have no control over transfers into the checking or I'd do something like you suggest to protect against this.
    – bstpierre
    Feb 7, 2011 at 3:09
  • FYI - Some HSA's do actually offer decent savings rates. See related post here money.stackexchange.com/questions/5779/…
    – CrimsonX
    Feb 7, 2011 at 14:51
  • It may be true that checking accounts can't pay interest, but that's mostly irrelevant since banks can apparently substitute NOW accounts in their place. After a little more intelligent googling and a couple of phone calls, I found at least one bank that offers interest on an HSA "checking" account.
    – bstpierre
    Feb 7, 2011 at 15:24
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As others have pointed out in comments and answers, the 6 withdrawal limit was based on Regulation D.

Banks/credit unions that offer checking-account based HSAs do exist, with no limit on the number of withdrawals (at least according to information given to me over the phone -- I didn't check the disclosure brochures).

Concrete examples (I can't vouch for any of these, just found them in my research):

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From my understanding all HSA accounts are going to be limited to 6 transfers a month.

Have you considered using a credit card you earn rewards on and then writing yourself a check out of the HSA at the end of the month?

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  • Yes, I could do that, but the accounting is simpler if everything just hits the debit card.
    – bstpierre
    Feb 6, 2011 at 22:06

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