You can withdraw money from an HSA, but the rules depend on what you spend it on

You can take money out of your HSA at any time. If you use it for may have access to medical expenses, the withdrawal is tax-free. If you use it for anything else, you pay income tax on the amount plus a 20% penalty — unless you are 65 or older, in which case the penalty disappears but the income tax remains.

The catch is that "may have access to" has a specific meaning under IRS rules. It includes doctor visits, prescriptions, dental work, vision care, and medical equipment. It does not include cosmetic procedures, gym memberships, or most over-the-counter vitamins. The IRS publishes a full list, and your HSA provider can tell you whether a specific expense qualifies before you withdraw.

If you leave your job or change health plans, you keep the HSA and the money in it. The account is yours permanently. You do not have to spend it by a certain date, and you do not lose it if you switch to a different type of health insurance.

Key Takeaways

  • Withdrawals for may have access to medical expenses are tax-free at any age; withdrawals for other purposes trigger income tax plus a 20% penalty until age 65.
  • may have access to expenses include doctor visits, prescriptions, dental and vision care, and medical equipment, but not cosmetic procedures or most vitamins.
  • Your HSA belongs to you even after you leave your job or change insurance, and the money does not expire.
  • You can request a withdrawal by check, bank transfer, or debit card, depending on your HSA provider's options.
  • Keep receipts for all medical expenses you pay from your HSA in case the IRS asks you to prove the withdrawal was may have access to.

How to request a withdrawal from your HSA

The process depends on your HSA provider. Most offer three methods: a debit card linked to the account, a check, or a bank transfer. Some providers let you use the debit card at the pharmacy or doctor's office directly. Others require you to pay out of pocket and then request reimbursement from the HSA.

To request a withdrawal, log into your HSA provider's website or app, or call their customer service line. You will find the withdrawal option in your account dashboard. If you are requesting reimbursement for a past expense, you may need to upload a receipt or invoice showing the date, amount, and what the expense was for.

Withdrawals typically process within one to three business days if you choose a bank transfer. Debit card transactions are immediate. Checks take longer — usually five to ten business days depending on your bank.

What counts as a may have access to medical expense

The IRS maintains a list of may have access to medical expenses. The most common ones are copays and coinsurance for doctor visits, hospital stays, and emergency care. Prescription medications and insulin are may have access to. Dental work — fillings, crowns, root canals, orthodontia — is may have access to. Vision care including eye exams, glasses, and contact lenses is may have access to. Medical equipment like crutches, wheelchairs, hearing aids, and blood pressure monitors is may have access to.

Some expenses are may have access to only if they are prescribed by a doctor. These include certain over-the-counter medications (like allergy pills or pain relievers if your doctor writes a prescription for them), weight-loss programs, and fertility treatments. Vitamins and supplements are generally not may have access to unless a doctor prescribes them to treat a specific condition.

Expenses that are not may have access to include cosmetic procedures, gym memberships, general wellness programs, most vitamins, and teeth whitening. Long-term care insurance premiums are not may have access to, though some long-term care expenses may be. If you are unsure whether an expense qualifies, ask your HSA provider or check the IRS Publication 502, which lists may have access to medical expenses in detail.

What happens if you withdraw money for non-medical expenses

If you withdraw money from your HSA and use it for something that is not a may have access to medical expense, you owe income tax on that amount. You also owe a 20% penalty on top of the income tax. For example, if you withdraw $1,000 and use it to pay for a gym membership, you would owe income tax on the $1,000 plus $200 in penalties.

The income tax rate depends on your tax bracket. If you are in the 22% federal tax bracket, you would owe $220 in federal income tax plus $200 in penalties, for a total of $420 on a $1,000 withdrawal. You may also owe state income tax depending on where you live.

The 20% penalty does not apply once you turn 65. After 65, you can withdraw money for any reason and only pay income tax on non-may have access to expenses — the penalty goes away. This makes an HSA similar to a traditional IRA after age 65, except that may have access to medical expenses remain tax-free for life.

Keeping records and proving your withdrawals are may have access to

The IRS does not require you to submit receipts when you withdraw money from your HSA, but you must keep them for your records. If the IRS audits you, they will ask to see proof that the expenses you paid for were actually may have access to medical expenses. Without receipts, you cannot prove it, and you may have to pay back taxes and penalties.

Keep receipts for at least three to seven years — the IRS can audit back that far. Store them in a folder, take photos, or scan them into a digital file. Include the date, the provider's name, the amount, and what the expense was for. If you paid for someone else's medical expense (like a spouse or dependent), keep the receipt and note whose expense it was.

If you use your HSA debit card, your provider may keep a record of the transaction, but that record usually only shows the merchant name and amount, not what you bought. A receipt from the pharmacy or doctor's office is more detailed and more useful if you are audited.

HSA withdrawals and your tax return

When you withdraw money from your HSA for may have access to medical expenses, you do not report it on your tax return. The withdrawal is tax-free, so there is nothing to report to the IRS.

If you withdraw money for non-may have access to expenses, you must report it on Form 8889 (Health Savings Account Information), which you file with your tax return. You will report the amount of the non-may have access to withdrawal, the income tax you owe, and the 20% penalty. Your tax software will usually walk you through this if you tell it you took a non-may have access to withdrawal.

Your HSA provider sends you a Form 1099-SA each January showing all the withdrawals you made the previous year. This form does not distinguish between may have access to and non-may have access to withdrawals — that is your responsibility to track. If you withdraw $5,000 and $4,000 of it is for may have access to expenses and $1,000 is for non-may have access to expenses, you report only the $1,000 on Form 8889.

Frequently Asked Questions

Can I withdraw money from my HSA after I retire or leave my job?

Yes. Your HSA is your property and stays with you for life, even if you leave your job, change health insurance, or retire. You can continue to withdraw money from it and use it for may have access to medical expenses at any time. After age 65, you can withdraw money for any reason, though non-may have access to withdrawals are subject to income tax.

What if I withdraw money and then find out the expense was not may have access to?

You can put the money back into your HSA as a redeposit within a certain timeframe, though rules vary by provider. Contact your HSA provider immediately to ask about redepositing the funds. If you cannot redeposit it, you will owe income tax and the 20% penalty on the non-may have access to withdrawal when you file your tax return.

Can I use my HSA to pay for my spouse's or child's medical expenses?

Yes, as long as they are your spouse or dependent. You can withdraw money from your HSA to pay for their may have access to medical expenses, and the withdrawal is still tax-free. Keep receipts showing whose expense it was in case you are audited.

Do I have to withdraw money from my HSA every year?

No. There is no requirement to withdraw money from your HSA in any given year. You can leave the money in the account and let it grow. Some people use their HSA as a long-term savings account for future medical expenses and do not withdraw anything until they are older or retired.

What if my HSA provider goes out of business?

Your money is protected. HSA funds are held in trust and are separate from the provider's business assets. If your provider closes, your money will be transferred to another HSA provider or returned to you. Contact your provider or the Department of Labor if you have questions about what happens to your account.