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If one participates in a high deductible health plan and health savings account, then later transitions to a normal health plan that does not qualify for HSA what happens to the account? Are the funds forfeit? Can you still use the funds for medical expenses? Can the funds sit in the account gaining interest forever?

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The HDHP requirement applies to your HSA contributions, but not to your HSA distributions.

Once you have money in your HSA, it is yours to spend on qualified medical expenses, whether or not you remain eligible to contribute further. You can pay for any out-of-pocket medical expenses (discussed in IRS Pub 502) that were incurred on or after the date that you opened your HSA.

The money in your HSA never expires (unlike an FSA) and is yours to keep until you spend it.

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  • There is no expiration to these funds? What if I didn't use the funds for a decade? I only ask this because FSAs are very strict use it or lose it, and I'd like to not lose money in this manner.
    – James
    Apr 27, 2018 at 0:01
  • @James There is no expiration of the funds. Once you contribute, the money is yours to keep until you spend it. It is more like an IRA than an FSA in this regard.
    – Ben Miller
    Apr 27, 2018 at 0:03

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