Health Insurance

How Can I Use HSA Funds?

Alexis Bryan
Alexis Bryan12 Dec 2022

You can use the funds in your Health Savings Account (HSA) to pay for IRS-qualified medical expenses, such as doctors’ visits and medications. You can pay for your IRS-qualified medical expenses using your HSA Bank Health Benefits Debit Card or pay out-of-pocket and reimburse yourself later with HSA funds.

To be eligible to open an HSA, you must have a special type of health insurance called a high-deductible plan (HDHP). These plans only start covering your health expenses once you have met your deductible, so many people choose to supplement HDHPs with a Mira membership. Mira can help you access affordable lab testing, urgent care visits, and virtual care visit without meeting a deductible.

Health Savings Accounts (HSAs)

HSA funds are a tax-free way of paying for IRS-qualified medical expenses. You own and control the money in your HSA. People will often use their HSA funds for dental or vision services if they do not have coverage.

Using an HSA gives you the following tax benefits:

  • Tax-deductible contributions up to an annual limit.
  • Tax-deferred investment growth.
  • Tax-free withdrawals for qualified healthcare expenses.

In 2022, the maximum contribution to an HSA is $3,650 for a single plan and $7,300 for a family plan. You can use HSA funds on various health care expenses for you, your spouse, and eligible dependents. The HSA bank publishes resources to help you understand the ins and outs of an HSA and what you can use the funds for, known as IRS-Qualified Medical Expenses

Common IRS-qualified Medical Expenses

There are frequent updates to the regulations around HSA expenses, so be sure to check before making a purchase to ensure you will not be penalized. Additionally, some employer-provided plans only reimburse a subset of expenses, so you may need to check the specific plan details.

The following list is not exhaustive but includes common IRS-qualified medical expenses that you can use your HSA funds to pay for: 

  • Acupuncture
  • Ambulance
  • Artificial limbs
  • Artificial teeth
  • Birth control treatment
  • Blood sugar test kits for diabetics
  • Breast pumps and lactation supplies
  • Chiropractor
  • Contact lenses and solutions
  • Crutches
  • Dental treatments (including X-rays, cleanings, fillings, sealants, braces, and tooth removals)
  • Doctor’s office visits and co-pays
  • Drug addiction treatment
  • Drug prescriptions
  • Eyeglasses (Rx and reading)
  • Fluoride treatments
  • Flu shots
  • Guide dogs
  • Hearing aids and batteries
  • Infertility treatment
  • Inpatient alcoholism treatment
  • Insulin
  • Laboratory fees
  • Laser eye surgery
  • Medical alert bracelet
  • Medical records charges
  • Menstrual care products
  • Midwife
  • Occlusal guards to prevent teeth grinding
  • Orthodontics
  • Orthotic Inserts (custom or off the shelf)
  • Over-the-counter medicines and drugs
  • Physical therapy
  • Special education services for learning disabilities (recommended by a doctor)
  • Speech therapy
  • Stop-smoking programs (including nicotine gum or patches, if prescribed)
  • Surgery, excluding cosmetic surgery
  • Vaccines
  • Vasectomy
  • Vision exam
  • Walker, cane
  • Wheelchair

How to Use HSA Funds

There are two ways to access your HSA funds. The first is to use the Health Benefits Debit Card directly to pay for services and products. The second way to use HSA funds is to pay out-of-pocket for qualified health expenses and reimburse yourself with funds from your HSA.

Health Benefits Debit Card

When you set up an HSA, you can get a Health Benefits Debit Card. You can use the debit card to use money from your HSA to pay for eligible expenses directly; however, there are limits placed on the Health Benefits Debit Card. For healthcare merchants like a doctor’s office or hospital, the daily limit is $5,000. At other merchants that are not healthcare specific but offer eligible medical products and services, like a grocery store, the limit is $3,500.

There is also a limit on the number of debit card transactions allowed per day to protect against fraud. For more information, you can call the number on the back of your Health Benefits Debit Card.

To pay for an expense that exceeds the Health Benefits Debit Card daily limit of $5,000, HSA Bank provides you with multiple options, which include:

  1. You can pay for an expense with your external, personal account or with a credit card and then reimburse yourself by scheduling HSA transfers within the Member Website or mobile app. (Note: there is a daily transfer limit of $2,500 to safeguard against fraudulent activity, so multiple transfers will be required for amounts above $2,500).
  2. You can work with your provider (or hospital) to make debit card payments over multiple days.
  3. You can use the online Bill Pay system to pay a provider. To access Bill Pay, log into the Member Website or mobile app and click on "Make HSA Transaction." (Note: there is no daily limit to pay a provider.)
  4. You can pay with an HSA Bank check. Checks can be purchased within the Member Website. Check your Health Savings Account Fee and Interest Schedule for any applicable fees for ordering checks. There is no daily limit on dollar amounts.
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HSA Reimbursement

An alternative to using the debit card is to pay yourself back by withdrawing money from your HSA at an ATM. You can use your HSA card at an ATM to reimburse yourself for eligible expenses paid out-of-pocket. Ensure that you keep receipts or documentation of the qualified expenses you will be reimbursed for, as you will be penalized for removing money from your health savings account for nonqualifying expenses. 

Health Savings Account Funds Frequently Asked Questions (FAQs)

HSA regulations are complicated and tend to change frequently. The HSA bank has many resources to help you navigate setting up and using your HSA. A comprehensive list of common questions can be found on their website, but keep reading some key points and frequently asked questions.

What happens if I use HSA funds for non-medical expenses?

If you are under 65 years old and use HSA funds for non-medical expenses, you will need to pay income taxes on the money and a 20% penalty. After the age of 65, you can withdraw pre-tax money from your HSA for non-medical expenses and only pay income tax, not the 20% penalty. 

Does my HSA money roll over year to year?

Any money left over in your HSA account at the end of the year will roll over to the following year. There is no time limit on using the funds, even if you no longer have HDHP coverage

If you have an HSA through your employer, you can withdraw the remaining balance when you leave your job. You can also use the money in your HSA to pay for your spouse’s and dependents’ medical expenses.

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Do I need to submit receipts for my HSA expenses?

You do not need to submit any receipts to get reimbursed for medical expenses; however, you should save the receipts for 7 years in case you ever get audited. You will need to prove the funds were used for qualified medical expenses. HSA Bank offers an online expense tracker to help you keep all of your medical expense documentation in one place.

There is no deadline for when you can reimburse yourself for medical expenses. In fact, you can wait decades, then reimburse yourself for all of the medical expense receipts you’ve paid since you opened your HSA.

Can I use my HSA for over-the-counter medicines?

Yes, there are some over-the-counter medicines your HSA funds can reimburse you for. Some common ones include:

  • Acid controllers
  • Acne medicine
  • Aids for indigestion
  • Allergy and sinus medicine
  • Anti-diarrheal medicine
  • Baby rash ointment
  • Cold and flu medicine
  • Eye drops
  • Feminine antifungal or anti-itch products
  • Hemorrhoid treatment
  • Laxatives or stool softeners
  • Lice treatments
  • Motion sickness medicines
  • Nasal sprays or drops
  • Ointments for cuts, burns, or rashes
  • Pain relievers, such as aspirin or ibuprofen
  • Sleep aids
  • Stomach remedies

What services do HSA funds not cover?

Some services and expenses that are not eligible for HSA reimbursement include:

  • Aromatherapy
  • Baby bottles and cups
  • Baby oil
  • Baby wipes
  • Breast enhancement
  • Cosmetics and skincare
  • Cotton swabs
  • Dental floss
  • Deodorants
  • Hair re-growth supplies and services
  • Health club membership dues
  • Humidifier
  • Lotion
  • Low-calorie foods
  • Mouthwash
  • Petroleum jelly
  • Shampoo and conditioner
  • Spa salts

Can I use HSA funds for child care?

You can use your HSA funds for some child care expenses. Eligible dependent care expenses include:

  • Au pair services
  • Babysitting services
  • Before- and after-school programs
    Custodial or eldercare expenses, in-home or daycare center (not medical care)
  • Nursery school
  • Pre-kindergarten
  • Summer day camp (not educational)

Bottom Line

Depositing money into an HSA can save you money on health care expenses, but there are limits to its use. HSA funds can only be used for qualified medical expenses. You can use your HSA funds by using the debit card provided or reimbursing yourself afterward.

For additional healthcare cost savings, consider a membership with Mira. With plan options averaging $25 per month, Mira provides access to $25 virtual care visits, discounted prescription medications, and affordable urgent care visits. Even without health insurance, you can find ways to access reasonably priced care with Mira.

Alexis Bryan

Alexis Bryan MPH, is a recent graduate of Columbia’s Mailman School of Public Health. She is passionate about increasing access to care to improve health outcomes. Outside of work, she loves to travel, read, and pay too much attention to her plants.