What can you use an hsa card for

A type of savings account that lets you set aside money on a pre-tax basis to pay for qualified medical expenses. By using untaxed dollars in a Health Savings Account (HSA) to pay for deductibles, copayments, coinsurance, and some other expenses, you may be able to lower your overall health care costs. HSA funds generally may not be used to pay premiums.

While you can use the funds in an HSA at any time to pay for qualified medical expenses, you may contribute to an HSA only if you have a High Deductible Health Plan (HDHP) — generally a health plan (including a Marketplace plan) that only covers preventive services before the deductible. For plan year 2022, the minimum deductible for an HDHP is $1,400 for an individual and $2,800 for a family. When you view plans in the Marketplace, you can see if they’re "HSA-eligible."

For 2022, if you have an HDHP, you can contribute up to $3,650 for self-only coverage and up to $7,300 for family coverage into an HSA. HSA funds roll over year to year if you don't spend them. An HSA may earn interest or other earnings, which are not taxable.

Some health insurance companies offer HSAs for their HDHPs. Check with your company. You can also open an HSA through some banks and other financial institutions.

Related content

• Learn about High Deductible Health Plans
• Read IRS.gov Publication 969 for details on HSAs and see if you qualify
• See the list of qualifying medical and dental expenses on IRS.gov Publication 502 (PDF)

» This page may be out of date

If you want to save for medical expenses and reduce your taxable income at the same time, you may benefit from a Health Savings Account.

Before you sign up, however, it’s important to understand that the money in these accounts may only be used for HSA qualified expenses. If you spend the money on ineligible items, expect to pay income tax and hefty penalties for your mistake.

Here’s what you need to know about HSAs and which expenses are permitted so you can make the most of the tax-free benefits.

Why should I open an HSA?

This government-regulated savings account is heavily tax-advantaged. Your income is taxed after any HSA contributions have been made, which reduces the amount of income you are taxed on. It also costs nothing to withdraw the money as long as it’s used for eligible expenses. You also have the option to invest your HSA in mutual funds or other investment tools to grow your money tax-free. Do keep in mind, however, that the amount of money you can contribute to your HSA per year is limited.

HSAs are offered through most health insurance companies, but if your provider doesn’t offer them, you can open one at a financial institution. You must be enrolled in a high-deductible health insurance plan to qualify for an HSA.

What expenses are eligible for an HSA?

The government only allows these tax advantages if you use your HSA money for qualified medical expenses. These costs generally include payment to doctors or dentists, prescriptions, imaging such as MRIs, medical services (such as home care) and medical equipment or supplies. You can also use the funds to reimburse yourself for any qualified medical expenses that your insurance didn’t cover and you had to pay out of pocket.

Examples of generally eligible expenses are hearing aids, psychological counseling, chiropractic services, condoms, breast pumps, eyeglasses, physical therapy and smoking cessation programs.

What expenses are not HSA eligible?

Rules have become stricter over the years about what expenses are eligible for HSA funds. General purchases that may benefit your overall health don’t count. Examples of no-nos from the IRS include vacations and vitamins. Other items that aren’t eligible include maternity clothes, funeral costs, child care for healthy babies, toiletries, over-the-counter medicine, swimming lessons and elective cosmetic procedures.

You also usually can’t use HSA money to pay for health insurance premiums unless you meet certain criteria. According to Optum Bank, you’re only qualified to use HSAs toward premiums if you’re enrolled in Medicare, are on COBRA continuation coverage, receive state or federal unemployment benefits, or have eligible long-term care insurance.

This page from the HSA Store has a thorough list of items that are and aren’t eligible for HSA funds, though it’s recommended you seek tax or legal advice if you aren’t sure whether your purchase is HSA-qualified.

What happens if you make unqualified purchases with your HSA account?

Be very careful not to use your HSA debit card or checks on non-eligible purchases. If you spend your HSA funds on unqualified expenses, whether intentionally or by accident, the transaction will go through, and you’ll have to pay income tax on the amount.

Yes, you read that correctly—even if you accidentally paid for a burger with your HSA debit card, you will have to report it on your annual income tax return and pay taxes on it. If you’re under 65 and spend the money on unqualified purchases, you must also pay a 20% penalty on top of the income tax. Be very careful not to use HSA money on unqualified expenses so you don’t lose a portion of your savings to taxes and penalties.

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