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Using your HSA

You can use the money in your Health Savings Account account to pay for any “qualified medical expense” permitted under federal tax law. These expenses include most medical care and services, dental and vision care and also includes over-the-counter drugs such as aspirin.

You can generally not use the money to pay for medical insurance premiums, except under specific circumstances, including:

  • Any health plan coverage while receiving federal or state unemployment benefits
  • COBRA continuation coverage after leaving employment with a company that offers health insurance coverage
  • Qualified long-term care insurance
  • Medicare premiums and out of-pocket expenses, including deductibles, co-pays, and coinsurance for:
    • Part A: Hospital and inpatient service
    • Part B: Physician and outpatient services
    • Part C: Medicare HMO and PPO plans
    • Part D: Prescription drugs
You can use the money in your Health Savings Account to pay for medical expenses for yourself, your spouse or your dependent children. You can pay for expenses of your spouse and dependent children even if they are not covered by your HDHP.

Any amounts used for purposes other than to pay for “qualified medical expenses” are taxable as income and subject to an additional 20% tax penalty. Examples include:
  • Medical expenses that are not considered “qualified medical expenses” under federal tax law (e.g. cosmetic surgery)
  • Other types of health insurance unless specifically described above
  • Medicare supplement insurance premiums
  • Expenses that are not medical or health-related
After you turn age 65, the 20% additional tax penalty no longer applies. If you become disabled and/or enroll in Medicare, the account can be used for other purposes without paying the additional 20% penalty.