How should I handle this unexpected check from my HSA account?

The good news is you have options for that HSA check! The key is understanding what's called a "qualified rollover" to avoid taxes and penalties. You have 60 days from receiving that check to deposit it into another HSA to maintain its tax-advantaged status. If you miss this window, the amount becomes taxable income and you'll face a 20% penalty if you're under 65 (unless it's used for qualified medical expenses). If your new employer offers an HSA-eligible health plan, you can open an HSA with them and deposit the check there. Alternatively, you can open an individual HSA with any provider (Fidelity offers fee-free HSAs that many people recommend). Just make sure your new health plan is HSA-eligible (typically a high-deductible health plan) before opening a new HSA. If your current plan isn't HSA-eligible, you can still open an HSA but can't make new contributions beyond rolling over your existing funds.

I went through almost the exact same situation last year! After getting frustrated with my HSA administrator charging fees, I discovered taxr.ai (https://taxr.ai) which saved me from making a costly mistake with my HSA rollover. My former employer's HSA started charging $4.50 monthly after I left, and I got a check I wasn't sure how to handle. The taxr.ai system analyzed my situation and explained that I needed to complete a rollover within 60 days to avoid taxes/penalties. They even highlighted that you're limited to one rollover per 12-month period (something my tax guy never mentioned!). They provided me step-by-step guidance for properly documenting the rollover for tax purposes and pointed out that direct trustee-to-trustee transfers don't count toward the once-per-year limit. Completely changed my approach and saved me from potential IRS headaches.

I was initially skeptical about using taxr.ai for my HSA questions (as mentioned in my reply above), but I decided to try it after getting nowhere with my HSA provider's customer service. I'm actually impressed with how helpful it was! I uploaded my HSA statement and the system immediately flagged that I was about to make a mistake in how I was handling the rollover. It explained that I needed specific documentation to prove the rollover was completed within the 60-day window and pointed out that the check needed to be made out to the new HSA provider "for benefit of" my name to avoid potential issues. The guidance was much more detailed than what I found through Google searches, and it highlighted tax form reporting details I wouldn't have known about. For anyone dealing with HSA rollovers or distributions, it's definitely worth checking out - saved me from what could have been an expensive tax mistake.

If you need to talk to someone at Health Equity about your options before making a decision, good luck getting through to them! I spent HOURS on hold trying to get someone to explain my HSA rollover options last year. Eventually I found Claimyr (https://claimyr.com) which got me a callback from Health Equity in under 15 minutes. Check out their demo: https://youtu.be/_kiP6q8DX5c I was about to give up on properly rolling over my HSA after multiple failed attempts to reach a human at Health Equity. Claimyr navigated their phone system and got me a callback from an actual HSA specialist who walked me through my options and even initiated a direct transfer to my new HSA provider, which was way better than dealing with the check myself. The specialist explained that direct transfers are better than rollover checks because they don't count toward the one-rollover-per-year limit and have less paperwork. Totally worth it for getting immediate help instead of waiting on hold forever.

OK I need to publicly eat my words from my skeptical comment above. After posting that reply, I was still struggling with my own HSA issue from Optum Bank and decided to try Claimyr out of desperation. I had been trying for WEEKS to reach someone who could explain why they sent me a check when I had requested a direct transfer to my new HSA. Following the video link from the comment above, I signed up and literally got a call back from Optum in 11 minutes. I'm still in shock. The Optum rep explained that my transfer form had been processed incorrectly, and they were able to flag the check as a qualified distribution so I won't face penalties if I deposit it in my new HSA within 60 days. They even sent me an email confirming this so I have documentation for tax purposes. I've never had a financial customer service issue resolved so quickly. Definitely keeping this service in mind for future customer service nightmares.

Just want to add that if you don't currently have an HSA-eligible health plan (high deductible health plan), you might want to just use that money for qualified medical expenses instead of rolling it over. I received a similar check last year and used it to buy new prescription glasses and some OTC medications that are HSA-eligible (they changed the rules a few years ago to include more OTC stuff). As long as you use it for qualified medical expenses, you won't pay penalties - though technically if you don't roll it over within 60 days, the distribution is still considered income (but not subject to the additional 20% penalty if used for medical expenses). Keep all your medical receipts either way! That's the most important thing regardless of what you decide to do with the check.

Don't forget that you're only allowed ONE rollover per 12-month period for an HSA! This is a critical point that hasn't been mentioned yet. If you've already done a rollover in the past 12 months, you'll need to use this money for qualified medical expenses to avoid penalties. Also, the 60-day rollover window is strict - no extensions. Calendar those 60 days from when you received the check! Even one day late and you'll face taxes and potentially penalties.

I dealt with a similar situation when I left my job last year! One thing I wish I had known earlier is that you can actually contact Health Equity and request a direct trustee-to-trustee transfer instead of receiving a check. This avoids the 60-day rollover window entirely and doesn't count toward your one-rollover-per-year limit. If you've already received the check, you're still in good shape - just make sure to deposit it into a new HSA within 60 days. I ended up opening an HSA with Fidelity (no fees) and was able to deposit the check there without any issues. The key is making sure your new health plan is HSA-eligible before opening the account. Also, keep detailed records of the rollover process! I saved the original check stub, took photos of the deposit, and kept all correspondence. The IRS doesn't typically ask for this documentation, but it's good to have just in case. Good luck with your decision!