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3 ways to consolidate multiple HSAs

Key takeaways

  • If you have multiple health savings accounts (HSAs) it can make sense to consolidate them with one provider. Consolidation could help save money on fees and make it easier to manage.
  • There are 3 ways to accomplish the transfer: through a cash transfer, a rollover, or an in-kind transfer.
  • Generally, HSA consolidation is tax-free.1 Transfers involving the potential sale of investments, like a cash transfer or HSA rollover, may generate capital gains. State taxes may be owed on capital gains in some states.
  • If you do want to consolidate, research multiple providers before doing so. Things to consider include investment options, fund fees, investment minimums, and account fees.

Throughout your career, you may change employers multiple times. In fact, 54% of employees under 35 considered changing jobs in the past year, and more than one third did change roles.2 Each new employer will likely offer new benefits, including new choices for health insurance. And if you enroll in a health savings account (HSA)-eligible health plan, you may end up with a new HSA provider too.

Consolidating your HSAs can boost your savings by reducing account fees and spare you from having to manage multiple accounts. If you have multiple HSAs and are ready to consolidate them, there are 3 ways to do so: through a cash transfer, a rollover, or an in-kind transfer. Here is how each of these works.

Cash transfer

Your new HSA provider works with your current HSA provider to transfer the money from your current account(s) to your new account. This is considered a trustee-to-trustee transfer. You never have to touch the money, but because the transfer is made in cash, you must sell any securities before the transfer.

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  • Moving cash over through a trustee-to-trustee transfer is the easiest form of HSA consolidation.
  • There is no limit under the tax laws on the number of times this trustee-to-trustee transfer can occur.

Possible disadvantages

  • If any of your HSA savings are invested, selling your holdings won't affect federal taxes but may affect state taxes, depending on where you live.

Account rollover

In this transfer method, you (as the account holder) will be right in the middle of the transfer. You begin by requesting a withdrawal from your current HSA provider—potentially selling assets in the process—which you'll then be responsible for redepositing with your new HSA provider.

Possible disadvantages

  • You are allowed to do an HSA rollover using this check-based method only once every 12 months across all HSAs, so if you have multiple accounts to transfer it could take more than one year.
  • This method requires more administration. The provider will cut you a check, potentially selling assets in the process, that you can then transfer to your preferred HSA provider.
  • If the funds aren't deposited into an HSA within 60 days, they will be considered a taxable distribution subject to both income taxes and a 20% penalty for not using the funds for qualified medical expenses.

In-kind transfer

This approach can be used in conjunction with the cash transfer option described above. It is similar to the cash transfer method, but instead of your current HSA provider transferring cash to the new provider, it directly transfers securities such as your stocks, bonds, or mutual funds.


  • Similar to a cash transfer, there is no limit under the tax laws on the number of times this trustee-to-trustee transfer can occur.
  • An in-kind transfer can be a great option because it allows you to keep your investments.

Possible disadvantages

An in-kind transfer is the least common method of transfer since it isn't always an option. Check your providers' transfer rules to see if they allow it.

Understand potential tax consequences

For the most part, HSA consolidation is tax-free. No tax is owed under the in-kind transfer method. However, under both cash transfer and HSA rollover methods, where investments are potentially sold, capital gains may be generated, and state taxes may be owed depending on where you live. Only growth in your and your employer's contributions will result in capital gains.

For residents of certain states, such as California and New Jersey, HSAs do not receive special state tax treatment. In these states, HSAs are viewed as brokerage accounts and state taxes may be owed on dividends, interest, and capital gains.

HSAs in New Hampshire and Tennessee do not receive special tax treatment, but capital gains are not taxed, so consolidating accounts will not result in additional taxes (although dividends and interest earned thereafter remain taxable).

Be wary of fees

Some HSA providers charge fees to your account, so where you consolidate your HSAs can affect your savings over time. If you consolidate your HSA to an account that doesn't charge fees, your savings may really add up. For example, a 35-year-old saving until age 65 may see nearly $40,000 more in savings by choosing a provider without account fees even if taxes are owed after account consolidation.

This graphic illustrates the compounding effect of fees. Consolidated into a no-fee account, $50,000 saved in HSAs could grow to $472,000 after 30 years. But if the same accounts included a provider charging a 0.50% annual fee, the total after 30 years could be eroded, ending at  $437,000.
The illustration above shows the difference in savings potential from consolidating versus not consolidating HSAs. The analysis is based on the following hypothetical scenario: Mary is a 35-year-old woman living in California with a household income of $100,000 and filing income taxes jointly with her spouse, subjecting them to an 8% state marginal tax rate. Mary has 2 HSA accounts. HSA 1 has a balance of $30,000 at a provider charging a 0.50% annual fee. HSA 2 has a balance of $20,000 at a provider charging a 0% annual fee. To take advantage of the lower cost HSA provider, Mary decides to consolidate her HSAs by transferring the balance of HSA 1 to HSA 2 at the beginning of the year. HSA 1 is comprised of $25,000 in total contributions she and her employer have made plus $5,000 in asset growth. Upon liquidating and transferring the proceeds to HSA 2, Mary will recognize $5,000 in capital gains in California and owe state taxes of $400 at her 8% state marginal tax rate. She makes annual contributions in excess of her HSA spending of $1,000 until age 65 and gets a 7% rate of return. The analysis assumes that Mary receives no dividends or interest over the period. It also assumes that applicable account state taxes due to consolidation, fees, and contributions are applied at the end of each year, as applicable, and in proportion to initial HSA balances.

Compare HSA providers

When deciding which HSA provider is right for you, you may want to consider the investment options that will be available to you as well as the total fees you may have to pay. Not all HSAs are created equal; for example:

  • Investment options: Some HSA providers may give you flexibility, similar to brokerage accounts, and allow you to invest in stocks, bonds, mutual funds, and exchange-traded funds. Others may be more restrictive.
  • Fund fees: Commissions, typically one-time fees, and expense ratios, the amount you'll pay to own a fund, may vary across available investment offerings.
  • Investment minimums: These vary by provider. Some have minimum balance requirements that may prevent you from being able to invest.
  • Account fees: Some HSA providers may also charge separate account fees, including fees to close or transfer your account.

Finally, you may want to continue contributing to the HSA offered by your current employer, even if you consolidate the balance elsewhere, so that you don't miss out on any employer contributions. Review your plan benefits with your employer and account balance minimums with your HSA provider, if applicable.

Consider a health savings account (HSA)

With an HSA, you can pay for qualified medical expenses in a tax-advantaged way.

More to explore

1. With respect to federal taxation only. Contributions, investment earnings, and distributions may or may not be subject to state taxation. 2. Young workers are changing the way we think about work,” Fidelity Workplace Thought Leadership, Fidelity Investments, 2022. Be sure to consider all your available options and the applicable fees and features of each before moving your assets.

This information is intended to be educational and is not tailored to the investment needs of any specific investor.

Investing involves risk, including risk of loss.

The information provided herein is general in nature. It is not intended, nor should it be construed, as legal or tax advice. Because the administration of an HSA is a taxpayer responsibility, you are strongly encouraged to consult your tax advisor before opening an HSA. You are also encouraged to review information available from the Internal Revenue Service (IRS) for taxpayers, which can be found on the IRS website at You can find IRS Publication 969, Health Savings Accounts and Other Tax-Favored Health Plans, and IRS Publication 502, Medical and Dental Expenses, online, or you can call the IRS to request a copy of each at 800-829-3676.

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