Can you use HSA for out-of-network reimbursement?
Asked by: Hershel Kautzer PhD | Last update: November 16, 2025Score: 5/5 (43 votes)
Can you use HSA for reimbursement?
HSA reimbursement is permitted for any qualified medical expense. The primary benefit of HSA reimbursement is to obtain the same pre-tax advantage of an HSA despite paying for medical expenses with taxed earnings.
How does reimbursement work for out-of-network?
Insurance companies usually cover less of the cost of an out-of-network provider. For example, you might have to pay a $25 copay if you see an in-network provider but a $35 copay if you see an out-of-network provider. Insurance companies do not usually reimburse you based on the amount you actually paid your provider.
What happens if you use HSA for non-HSA?
Using Funds for Non-Medical Purposes Results in Penalties
Thus, they not only lose the tax benefit of having a health savings account, but they also have to pay a one-fifth penalty for funneling money through the account.
Can I use my HSA to pay off medical bills?
Unfortunately, you can't use your HSA to pay for your medical debt directly but there are ways you can use it indirectly. Use your HSA to pay for qualified medical expenses and put the money you would have otherwise used toward your medical debt.
New HSA Rules in 2025 You Need to Know
Can I use my HSA for gym membership?
Generally, the IRS doesn't allow pretax dollars in HSAs or FSAs for gym memberships. This is because they see them as expenses for general well-being rather than medical necessity. However, with a Letter of Medical Necessity (LMN), your HSA or FSA could be used to fund those expenses.
What can you not pay with HSA?
Generally, you can't use your HSA to pay for expenses that don't meaningfully promote the proper function of the body or prevent or treat illness or disease. Nutritional supplements and weight loss programs not prescribed by a physician are examples of expenses that would not be covered by your HSA.
What triggers an HSA audit?
Does HSA spending trigger an audit? The IRS doesn't monitor how you spend your HSA funds throughout the year, but that doesn't mean they won't ask for proof that your expenses were eligible. And if your tax return contains unrelated IRS audit red flags, your risk for an HSA audit could increase.
What to do if you accidentally use your HSA for non-medical expenses?
If you've mistakenly used HSA funds for nonqualified expenses, you must repay the distribution amount back into your HSA by the tax filing deadline for the year in which the distribution occurred. By reimbursing your HSA, you can avoid the income tax and the 20% penalty on nonqualified distributions.
How does IRS know what you spend HSA on?
Verification of expenses is not required for HSAs. However, total withdrawals from your HSA are reported to the IRS on Form 1099-SA. You are responsible for reporting qualified and non-qualified withdrawals when completing your taxes.
How to get reimbursed for out-of-network therapy?
- Check your out-of-network benefits.
- Call your insurance company to verify your benefits.
- Ask your therapist for a Superbill.
- Receive out-of-network reimbursement!
What happens if you use an out-of-network provider?
When you get care OON, your insurer might set a different deductible and might not count these costs towards your annual out-of-pocket limit. OON providers also don't have to limit their charges to what your insurer considers reasonable, which means you could end up paying balance billing charges.
Can you negotiate with an out-of-network provider?
It's best to visit an in-network doctor to save on out-of-pocket costs. But if you have to use an out-of-network provider, check if your plan covers a portion of out-of-network services in advance. You can also negotiate a lower medical bill with the provider.
Do I need proof for HSA reimbursement?
And while it isn't required that you submit receipts to be reimbursed from your HSA, we recommend it in case of an IRS audit.
What if I never use the money in my HSA?
Myth #2: If I don't spend all my funds this year, I lose it. Reality: HSA funds never expire. When it comes to the HSA, there's no use-it-or-lose-it rule. Unlike Flexible Spending Account (FSA) funds, you keep your HSA dollars forever, even if you change employers, health plans, or retire.
Can I use my HSA to reimburse myself for insurance premiums?
By using untaxed dollars in an HSA to pay for deductibles, copayments, coinsurance, and some other expenses, you may be able to lower your out-of-pocket health care costs. HSA funds generally may not be used to pay premiums.
Can I use my HSA to pay myself back for medical expenses?
Yes. As long as you incurred your qualified medical expense after you established your HSA, you can reimburse yourself for those expenses using your HSA money any time.
What happens if I use my HSA for groceries?
If you use your HSA for an expense other than eligible medical expenses you can subject yourself to significant IRS penalties. Inappropriate use of your HSA funds may also leave you without money to pay for your eligible medical expenses in the future.
What happens if I use my HSA for Botox?
Can you use HSA funds to pay for Botox? If you're using Botox for cosmetic purposes like reducing wrinkles or fine lines, it's not considered an HSA-eligible expense. However, Botox may be HSA eligible if it's used to treat a medical condition like chronic migraines, severe muscle spasms, or overactive bladder.
What happens if I use my HSA for ineligible expenses?
Prior to age 65, if you use your money for non-qualified expenses, the IRS imposes a withdrawal penalty of 20 percent on the amount withdrawn. To help you, below are some services and expenses that are not qualified: Aromatherapy. Baby: bottles, cups, formula, oil & wipes.
What is HSA receipt loophole?
The Adult Child HSA Family Contribution Loophole
That's why you can do things like save receipts for decades and then pull the money out of the account. That's why you can use it as a stealth IRA by investing in it for decades and then pulling it out after age 65 penalty-free and buying a sailboat with it.
Can I use my HSA to pay for yoga?
Fitness fees do not immediately qualify as eligible HSA/FSA expenses, but they do qualify if a provider recommends exercise to prevent or treat a medical condition. To qualify those expenses for reimbursement with an HSA/FSA administrator, you need a Letter of Medical Necessity from a provider.
What is the downside of an HSA?
Drawbacks of HSAs include tax penalties for nonmedical expenses before age 65, and contributions made to the HSA within six months of applying for Social Security benefits may be subject to penalties. HSAs have fewer limitations and more tax advantages than flexible spending accounts (FSAs).
Can I use my HSA to pay for gym membership?
Gym memberships. While some companies and private insurers may offer discounts on gym memberships, you generally can't use your FSA or HSA account to pay for gym or health club memberships. An exception to that rule would be if your doctor deems fitness medically necessary for your recovery or treatment.
Is it illegal to use HSA money for anything?
You generally can't use HSA funds to pay premiums. Once you turn 65, you can use the money in your HSA for anything you want. If you don't use it for qualified medical expenses, it counts as income when you file your taxes.