How To Set Up an HSA Without an Employer


Calley Means

Published Date:

January 31, 2024


An investment in your health is a worthwhile investment. An HSA allows you to save and plan for your health and wellness needs by making investments in your health more affordable. Some employers offer HSA or FSA plans to their employees, but you don’t need an employer to set one up. 

Here’s what you need to know about setting up an HSA without employer involvement. 

What Is an HSA?

An HSA, or a health savings account, is a savings account used specifically for health and wellness-related purchases. HSAs are designed to cover many everyday medical expenses, like copays on prescriptions and doctor visits. They can also be used to purchase things like over-the-counter medicines and first aid supplies.

The advantage of using an HSA instead of your personal money has to do with taxes. The money you deposit into your HSA is pre-tax money. Being able to earmark pre-tax money and budget efficiently helps to make healthcare-related costs more affordable. 

What Is the Difference Between an HSA and an FSA?

HSA and FSA accounts are often used for the same purposes, but they’re very different in the way that they operate. An HSA account gives more control to the individual who owns the account. An FSA account gives most of the control to an employer who manages the account.

A health savings account (HSA) is an account established and controlled by a person who is eligible to open the account. You’re allowed to make as many deposits and withdrawals as you’d like, and you don’t have a time limit to spend the money.

An FSA, or a flexible spending account, is an account controlled by an employer. Employers often match employee contributions up to a certain threshold. Any unused FSA funds expire at the end of the year. If you don’t use it, you lose it. 

Can You Set Up an HSA Without an Employer?

Most people set up their HSA accounts without an employer. HSA accounts are available to anyone with a high deductible insurance plan who isn’t currently receiving insurance through Medicare or Medicaid. People choose to establish HSA accounts for themselves to reduce the cost of health and wellness purchases.

An HSA account can be entirely self-managed. You can take complete control over your deposits, withdrawals, use, and reimbursement. 

How To Set Up an HSA Without an Employer

Most people set up their HSA without an employer. Going the solo route makes it easier for independently employed people to manage their own healthcare needs. Financial institutions that offer HSA accounts are very familiar with people establishing accounts for themselves. It’s usually a very simple process, and an employee of the institution can walk you through their specific rules and requirements.

Consider How Payment Works

The most convenient way to use your HSA is through a debit card linked directly to your HSA account. You can use your HSA debit card just like any other debit card when you shop with a retailer that offers HSA/FSA payment processing, and this is the easiest way to keep track of your HSA purchases.

Some HSA accounts don’t offer a debit card, so you’re required to pay for eligible purchases with your own personal money and reimburse yourself for the exact amount at a later date. If you don’t mind going through the reimbursement process, it won’t be an issue — but if you’d rather keep things simple, a debit card might be a better option.

Consider Interest Rates 

An HSA is a savings account, and savings accounts can have varying interest rates. If you plan on depositing a substantial amount of money into your HSA, it may be worthwhile to pursue an HSA with a financial institution that offers excellent interest rates.

Since there is no time limit on reimbursements, you can choose to let your HSA funds sit in your account and reimburse yourself for all of your purchases at the end of the year. You can technically wait as long as you want as long as you’ve saved your receipts and maintained an active HSA account in good standing. 

Choose Your Financial Institution

Most banks and credit unions offer HSA accounts to their members, and you may even score a special perk for choosing to open an HSA account with your current financial institution. Some banks and credit unions offer perks like special interest rates on HSA accounts as a loyalty reward.

Your insurance company may also offer you an HSA if you qualify for one. Ask your health insurance representative about HSA options for policyholders. 

Compare and contrast the HSA options available to you and choose the financial institution or insurance company you’re most comfortable working with.

Choose Your HSA Account Provider

When you’re sure of what you’re looking for in an HSA account, open an account with the financial institution that best meets your needs. The process for opening an HSA usually involves filling out a quick piece of paperwork or an online form, and it isn’t much different from opening any other kind of savings account. 

The process typically takes less than 15 minutes, and an officer or representative will generally walk you through it.

Make Your First Deposit

If you don’t have an employer, that likely means you’re an entrepreneur, a small business owner, or a contract worker. You’re ordinarily responsible for paying quarterly taxes on the income you make. Depositing money into your HSA makes it exempt from taxes, and you can report your HSA deposits on your taxes.

You’ll never need to pay taxes on your HSA money if you use it as it’s intended to be used. If you make a withdrawal or spend HSA fund money on something that isn’t eligible, you’ll be required to pay a 10% to 20% tax penalty on the money that wasn’t spent on eligible purchases. 

How To Manage Your HSA Without an Employer

You’re responsible for overseeing your own HSA. That means you get to make all the important decisions about making deposits and withdrawals. You also need to keep great records of how much HSA money you’ve spent and the way you spent it.

Calculate Your Deposits Wisely

You don’t have to regularly make deposits into your HSA if you have plenty of funds set aside for your healthcare needs. You can choose to store money in your HSA to allow it to accumulate interest for future use, but you don’t need to if you don’t want to. 

The moment your tax-free money reaches your HSA account, you can’t withdraw it or spend it on something other than an HSA-eligible purchase without paying a tax penalty. Be careful not to deposit money you may need later.

Keep Excellent Records 

Your purchases only count as HSA eligible if they can be verified. You need to keep receipts for every HSA purchase, whether you make that purchase with your HSA-linked debit card or you reimburse yourself.

If you’ve received a Letter of Medical Necessity that enables you to make a purchase that isn’t usually HSA eligible, you need to keep a copy of your letter with your receipts for those purchases. If you don’t have a Letter of Medical Necessity, your purchases will be considered ineligible, and you’ll need to pay a tax penalty. 

Where To Use Your HSA Funds

You can technically use your HSA anywhere that sells eligible goods and services. The biggest difference is how you’ll use your HSA. If you’re shopping with a merchant that doesn’t accept HSA/FSA direct payments, you’ll need to pay with your own money and reimburse yourself.

Truemed makes it easy for retailers to offer direct HSA/FSA payment processing to their customers. We have a full list of gyms, health food brands, supplement brands, and workout equipment brands that accept HSA/FSA payment processing. We even make it easy to get a Letter of Medical Necessity for purchases outside the scope of what’s normally HSA-eligible. 

You can shop our selection of retailers that accept direct HSA/FSA payments to make investing in your wellness easier. If you’re a merchant that offers HSA/FSA-eligible products or services, you can use our simple three-step process to integrate Truemed into your website. Your customers will be glad you did. 

The Power Is in Your Hands

It’s relatively easy to set up an HSA account without an employer. Many people establish and manage their own HSA accounts. Your HSA empowers you to take control of your own healthcare and make decisions to keep yourself well. The Truemed philosophy is that medicine is more than just a doctor’s visit, and we aim to help people make choices to improve their wellness. Merchants who integrate with Truemed make it easy to spend your HSA funds on the things that matter most.


2023 Publication 969 Health Savings Accounts and Other Tax-Favored Health Plans | Internal Revenue Service

Reimbursement account basics | Harvard Pilgrim Health Care

How HSA-eligible plans work |

Eligible | American Library Association

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