How to withdraw money from HSA for non-medical expenses?

Asked by: Ms. Demetris Casper PhD  |  Last update: March 12, 2025
Score: 4.7/5 (5 votes)

You can submit a withdrawal request form to receive funds (cash) from your HSA. If the cash is used to pay for ineligible purchases, it must be reported when you're filing your taxes. Once it's reported, it's subject to an income tax and treated as though it had never been in your tax-free HSA.

Can I withdraw from my HSA for non-medical expenses?

You can withdraw money at any time if it's used for qualified medical expenses. However, if you withdraw money for other purposes, your withdrawal will be subject to income tax (if the contribution was pre-tax) and a 20% penalty.

What happens if I accidentally use my HSA card for non-medical expenses?

Nothing happens immediately if you accidentally use your HSA card for non-medical expenses. However, you should be aware that all withdrawals from your HSA for non-medical expenses are taxable as income plus a 20% penalty. After age 65, the 20% penalty goes away but income tax still applies.

How can I cash out my HSA account?

Online Transfer – On HSA Bank's Member Website, you can transfer funds from your HSA to an external bank account, such as a personal checking or savings account. There is a daily transfer limit of $2,500 to safeguard against fraudulent activity.

Can I use my HSA card to buy groceries?

No, you can't use your Flexible Spending Account (FSA) or Health Savings Account (HSA) for straight food purchases like meat, produce and dairy. But you can use them for some nutrition-related products and services. To review, tax-advantaged accounts have regulatory restrictions on eligible products and services.

DOUBLE Your HSA By Fixing These 4 Frequent Mistakes | Health Savings Account

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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.

What if I accidentally bought food on my HSA?

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.

Can I transfer money from my HSA to my bank account?

Online Transfers – On HSA Bank's member website, you can reimburse yourself for out-of-pocket expenses by making a one-time or reoccurring online transfer from your HSA to your personal checking or savings account.

What ATM can I use my HSA card at?

Associated Bank ATMs are always fee-free. Can I use my HSA debit card at an ATM? Yes, you can use your Associated Bank HSA Debit Mastercard® to withdraw cash to pay for eligible expenses or reimburse yourself for expenses you have already paid. Associated Bank ATMs are always fee-free.

How do I withdraw excess money from HSA?

You can take out the excess contribution by making a request with your HSA provider, which may involve filling out a form or two. If you have been contributing to your HSA via payroll, you should also inform your employer. Once you take the money out it will be regular taxable income earned.

How often do people get audited for HSA?

Answer: It depends on how much tax free money has been hiding in your HSA. Since you are asking in November instead of January I am guessing that your HSA is being audited (looked at by an algorithm) every 90 days; or perhaps every 60 or even ever 30 days, depending on the balance.

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.

Can you use HSA 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.

Can I cash out my HSA when I leave my job?

Yes, you can cash out your HSA at any time. However, any funds withdrawn for costs other than qualified medical expenses will result in the IRS imposing a 20% tax penalty. If you leave your job, you don't have to cash out your HSA.

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 borrow from my HSA and pay it back?

No.

Can I get cash out of my HSA?

Yes, you can withdraw funds from your HSA at any time. But please keep in mind that if you use your HSA funds for any reason other than to pay for a qualified medical expense, those funds will be taxed as ordinary income, and the IRS will impose a 20% penalty.

Why is my HSA card being declined when I have money?

Card declines can occur because funds have expired, new cards have been issued, the card does not have sufficient funds or various other reasons. You typically find the contact information for your plan administrator on the back of your FSA/HSA card.

How do I access my HSA funds?

When it comes to using your HSA funds you have several options.
  1. HSA Central Debit Card – Pay for eligible medical items with your HSA Central Debit Card. ...
  2. Digital Wallet - Use your card through your preferred mobile wallet: Apple Pay®, Samsung Pay, or Google Wallet™.

What happens if I accidentally used my HSA card for groceries?

You can repay the incorrect distribution before filing your federal taxes for that tax year. However, if you do not correct the mistake, the unqualified amount will be subject to income tax, and you may also face an additional 20% tax penalty.

What if I spend my HSA on non-medical?

In addition, if HSA funds are withdrawn before age 65 and not used for eligible medical expenses are generally subject to an additional 20% tax penalty. In other words, you may lose the tax benefits when you use HSA for non-medical expenses. There may also be a significant tax fee or penalty.

Where can I transfer money from HSA?

How do I move my HSA funds?
  • Enroll in a Health Savings Account with HSA Central.
  • Fill out the Direct Transfer Request Form.
  • We'll review the form and process your information.
  • Your funds will be transferred by check from your current account to HSA Central.

What are the most common mistakes for HSA?

Common HSA mistakes and how to avoid them
  • Using an HSA when you're not eligible. ...
  • Paying for ineligible expenses. ...
  • Contributing too much to your account. ...
  • Paying someone else's medical bills. ...
  • Using all of your funds. ...
  • Using both an HSA and FSA. ...
  • Stay ahead of mistakes with HSA Store.

Can I use my HSA card for vitamins?

For a vitamin or supplement to be considered eligible, it must be prescribed by a healthcare provider to treat a diagnosed medical condition. This means that simply purchasing vitamins for general health maintenance purposes would not qualify for HSA reimbursement.

Can I get in trouble for using HSA money?

When health savings accounts aren't used for their intended purposes, account holders are often assessed penalties. When an account holder under the age of 65 uses their health savings account's funds for non-medical expenses, they have to pay income tax on the money spent plus a 20-percent penalty.