Give it to me straight, doc

Contextualizing the finance news you need to know.

So, you’ve been laid off. First step: Take a few days to be sad, mad, and completely immobilized beneath your duvet. (Sour Patch Kids help, too.) Second step: Update your LinkedIn. Third step: Get your financial accounts straightened out. Let’s start with an easy one, like your health savings account, or HSA. An HSA is a hot little savings tool, but it’s important to be proactive to make sure that money keeps working for you in the case of a layoff. Here’s where to start:

Option 1: Leave it where it is

Unlike a flexible spending account, HSA money rolls over from year to year and is yours to spend on qualified medical expenses. That means there won’t be any company vesting requirements or other weird hoops to jump through after a layoff. If you’re planning to take some time off after getting laid off (extremely valid, IMO), you can literally just leave your HSA money exactly where it is. The account won’t disappear after HR unceremoniously kicks you out of the company Slack.

One thing to consider: Some banks charge monthly admin fees for HSA account holders. Your best bet to avoid hefty fees? Contact the bank where your account is held and ask about any fees you might face—fees your former employer may have covered, for example, depending on your benefits.

Option 2: Roll it over

If you get a new job right away, you might have the option to roll your former HSA into an HSA through your new employer. (That’s only if your new employer offers an HSA-compatible option like a high-deductible healthcare plan, or HDHP.) This is a solid option if you’re someone who actively invests in an HSA and you want to make sure the funds aren’t gathering dust with your former employer.

A quick note on this option: To initiate the rollover, it can be better to work with your “destination” HSA bank instead of your former HSA bank. After all, if I’m a bank receiving someone’s hefty HSA deposit, I’m gonna do my absolute best to make sure the money is processed quickly and accurately.

You’ll also want to make sure the HSA funds aren’t distributed directly to you, the account holder, via check or direct deposit. The only HSA distributions you should make involve reimbursing yourself for qualified medical expenses. Otherwise, you’re gonna get taxed big time. Have your new HSA holder communicate with your old HSA holder to avoid any hiccups.

Option 3: Have your cake and eat it, too

Want to know something crazy? You can technically have multiple HSAs, which means you can leave the funds with your former employer and open another HSA when you get a new job. Of course, you won’t be able to contribute to your old HSA through your new job’s payroll, but you could technically keep both accounts. We don’t know why you would, but you could.

Oh, and one more thing while we’re doing a deep dive into HSAs. Now’s a good time to update your beneficiaries to ensure that money goes to someone you care about in the event of your untimely death. We know, we know—you just got laid off, and it’s not a great time to discuss untimely death. We’re just sayin’. 🙃