This site is an independent educational resource. We are not a tax advisor, financial advisor, insurance broker, HSA administrator, or HRA administrator. Contribution limits and eligibility rules are sourced from IRS Publication 969, IRS Revenue Procedure 2025-19, IRS Notice 2026-05, and Healthcare.gov. Verified April 2026. Nothing here is personalised tax, financial, or medical advice. Consult a qualified tax professional or licensed insurance agent before making decisions about your health benefits.

HSA vs HRA

Updated April 2026

HSA vs HRA When You Leave Your Job: portability rules in 2026

Portability is the single biggest practical difference between HSA and HRA. When you leave: your HSA goes with you. Your HRA almost certainly does not.

HSA when you leave

It is yours. Always.

  • + Balance stays with you permanently
  • + Use existing balance tax-free any time
  • + Roll to any new custodian, no tax impact
  • + Continue investing in index funds
  • - New contributions stop (no HDHP = no new contributions)

HRA when you leave

Forfeited, usually.

  • ! Unused balance reverts to employer
  • ! Coverage ends at termination date
  • ~ Spend-down period: 90 days on some plans
  • ~ Must submit pre-termination claims only
  • ~ Check your SPD for exact terms

Rolling over your HSA to a better custodian

Many employer-sponsored HSAs are with sub-optimal custodians (HealthEquity, Optum Bank, WEX) that charge high fees or limit investment options. When you leave your job, this is the best time to roll your HSA to a better custodian.

Trustee-to-trustee transfer (preferred): You instruct the old custodian to transfer directly to the new custodian. No tax form required. No limit on frequency. No 60-day rule. This is the cleanest method.

Indirect rollover: You take a distribution (the custodian sends you a check or deposits to your bank). You must re-deposit the full amount into a new HSA within 60 days or the distribution is taxable + 20% penalty. Limited to once per 12 months.

Best destination custodians: Fidelity (no fees, full brokerage), Lively (no fees, designed for individuals). Both accept incoming rollovers from employer-sponsored HSAs.

Pro-rated contribution limit for mid-year job changes

If you had HDHP coverage from January through June (6 months) and then lost coverage, your 2026 HSA contribution limit is: 6/12 x $8,750 = $4,375 for family coverage. If you already contributed more than this by the time coverage ended, the excess must be removed before your tax filing deadline (with earnings, to avoid a 6% excise tax).

Months with HDHP in 2026Self-only limitFamily limit
3 months$1,100$2,188
6 months$2,200$4,375
9 months$3,300$6,563
12 months$4,400$8,750

Based on 2026 limits ($4,400 self / $8,750 family). Last-month rule exception not shown above; consult a tax professional for the testing period implications.

The Medicare timing trap for job-leavers

If you are leaving a job at or after age 65, be aware: claiming Social Security triggers Medicare Part A enrollment retroactively by up to 6 months. If you made HSA contributions during that retroactive window, those contributions become excess contributions. The safest approach: stop contributing to your HSA 6 months before you plan to claim Social Security, regardless of whether you are still working and on HDHP coverage. See the eligibility page for full details.

FAQ

What happens to my HSA when I leave my job?+
Your HSA is your account - it stays with you when you leave your job. You do not lose any funds. You can continue using the existing balance tax-free for qualified medical expenses. You can roll it over to a new HSA custodian (Fidelity, Lively, HSA Bank) at any time via direct trustee-to-trustee transfer, which has no tax consequences and no limit on how often you do it. You can also make indirect rollovers (take a distribution and redeposit it within 60 days), limited to once per 12-month period. You cannot make new contributions to the HSA once you lose HDHP coverage.
What happens to my HRA when I leave my job?+
Most HRA balances are forfeited when you leave your employer. The HRA is funded and owned by the employer, not you. Some plans offer a spend-down provision (also called a run-out period), typically 90 days after termination, during which you can submit claims for expenses incurred before your termination date. After the spend-down window closes, any remaining balance reverts to the employer. A few plans offer extended spend-down or post-employment coverage, but these are employer-specific - check your Summary Plan Description.
Can I still contribute to my HSA after leaving my job?+
You can contribute to your HSA for any month in which you were covered by a qualifying HDHP for at least one day. If you leave your job and lose HDHP coverage mid-year, you cannot contribute for the months after your HDHP coverage ends. Your contribution limit for the year is pro-rated by the number of months with HDHP coverage (1/12 of the annual limit per month). Exception: the last-month rule lets you contribute the full annual limit if you have HDHP coverage on December 1, but requires maintaining HDHP coverage for all of the following calendar year.
Can I pay COBRA premiums from my HSA?+
Yes - COBRA premiums are a qualified medical expense if you are receiving unemployment compensation. HSA funds can be used to pay COBRA premiums tax-free during periods of unemployment benefit receipt. Outside of unemployment periods, COBRA premiums are not generally a qualified HSA expense unless you are age 65 or older. Note: paying COBRA premiums from an existing HSA balance is fine, but you cannot make new HSA contributions while on COBRA unless your COBRA plan is also an HDHP.
Related:HSA eligibility rules2026 contribution limitsHSA retirement strategy