Tax Benefits

• HSAs are like 401(k) retirement accounts. You divert a portion of your income to the account on a pre-tax basis. Money sits in the account and grows on a tax-free basis. Diversion of funds will reduce your overall tax bill because it reduces adjusted gross income. In exchange for these tax benefits, HSA funds must be used for qualified medical expenses. Unauthorized expenses are taxed as income and subject to penalties. These restrictions remain after you have been laid off.
  
  

Insurance Premiums

• Insurance premiums generally are not considered qualified medical expenses, but under IRS regulations, people who are laid off can use HSA money to pay for health insurance under COBRA. Persons collecting federal unemployment benefits can also pay for health insurance with HSA funds.
  
  

Rollover

• You may be able to keep the money in your employer-sponsored account, but you may have to roll it over to another administrator -- depending on your employer's plan. This is similar to a 401(k) rollover. Be sure to ask about transfer fees if you do this. It may help to shop around, if you do this, because fees from some administrators are higher than others.
  
  

Eligibility

• HSA plans are only available to individuals enrolled in high-deductible health insurance plans. They offer lower premiums than traditional health insurance plans, but coverage usually only begins after patients have incurred significant medical expenses. Amounts vary by plan, but out-of-pocket costs can top $11,000 for some high-deductible family plans. To contribute to your HSA account after layoff, you must be enrolled in a high-deductible plan.