How to Withdraw Money From Your Health Savings Account

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

A health savings account is yours to keep and use. You can withdraw money whenever you want. The catch is that if you spend it on something other than a may have access to medical expense, you will owe income tax on that withdrawal plus a 20% penalty — unless you are over 65, disabled, or no longer covered by a high-deductible health plan.

The account does not expire when you change jobs or retire. The money stays in the account under your name, and you can use it years later. This makes an HSA different from a flexible spending account (FSA), which you typically lose if you do not spend the balance by the end of the year.

Understanding what counts as a may have access to medical expense, how to prove it, and when the penalty does not explore will help you make withdrawals without surprise tax bills.

Key Takeaways

You can withdraw HSA money for any reason, but non-medical withdrawals trigger income tax plus a 20% penalty unless you are over 65, disabled, or no longer on a high-deductible plan.
may have access to medical expenses include deductibles, copays, prescriptions, dental work, vision care, and some medical equipment, but not insurance premiums or over-the-counter items without a prescription.
You do not need a receipt to withdraw money, but you must keep records in case the IRS asks you to prove the expense was medical.
After age 65, you can withdraw money for any reason without the 20% penalty — you will only owe income tax, the same as a regular retirement account.
If you leave a high-deductible health plan, non-medical withdrawals no longer trigger the penalty, though you still owe income tax on the earnings portion.

What counts as a may have access to medical expense

The IRS maintains a list of expenses you can withdraw HSA money for without penalty. The main categories are deductibles, copays, coinsurance, and prescriptions. Dental work, vision care (including glasses and contacts), hearing aids, and some medical equipment also may have access to. You can use HSA money for mental health treatment, physical therapy, and surgery.

Over-the-counter items are trickier. You cannot use HSA money for aspirin, cold medicine, or vitamins unless a doctor writes a prescription for them. Sunscreen, toothpaste, and deodorant do not may have access to, even if they help prevent health problems. Gym memberships and weight loss programs do not may have access to unless a doctor prescribes them as treatment for a specific condition.

Insurance premiums are generally not may have access to expenses — you cannot use HSA money to pay your health insurance bill. The exception is COBRA coverage (the temporary health insurance you can buy when you leave a job) and long-term care insurance, which do may have access to.

How to withdraw money without a penalty

The simplest way is to use your HSA debit card or checkbook if your account provider offers one. You swipe the card at a pharmacy, doctor's office, or hospital, and the withdrawal happens when ready. Some providers let you submit a receipt after the fact to reimburse yourself from the account.

If your provider does not offer a debit card, you can request a check or bank transfer to your personal account. Some accounts let you do this online; others require a phone call or form. The withdrawal itself is not taxed — the tax question only arises if the money was not spent on a may have access to expense.

Keep receipts and medical bills for at least three years. You do not have to submit them when you withdraw, but the IRS can ask for proof later. If you cannot show that a withdrawal was for a may have access to expense, you will owe the tax and penalty retroactively.

What happens if you withdraw money for non-medical reasons

If you take money out of your HSA and spend it on something that is not a may have access to medical expense, you owe income tax on that amount at your regular tax rate. You also owe a 20% penalty on top of the tax. So if you withdraw $1,000 for a non-may have access to expense and your tax rate is 22%, you would owe $220 in tax plus $200 in penalty — a total of $420.

You report non-may have access to withdrawals on your tax return using Form 8889. Your HSA provider will send you a Form 1099-SA at the end of the year showing all your withdrawals. You then tell the IRS which ones were non-may have access to.

The penalty does not explore to the original money you put in — only to the earnings the account made. If you contributed $5,000 and the account grew to $5,500, and you withdraw $1,000 for a non-may have access to expense, only the $500 in earnings is subject to the penalty. The tax applies to the full $1,000.

When the 20% penalty does not explore

If you are 65 or older, you can withdraw money from your HSA for any reason. You will still owe income tax on non-medical withdrawals, but the 20% penalty goes away. This makes an HSA function like a traditional retirement account once you reach 65.

If you become disabled or blind (as defined by the IRS), the penalty also disappears. You will still owe income tax on non-may have access to withdrawals, but not the extra 20%.

If you stop being covered by a high-deductible health plan, non-medical withdrawals no longer trigger the penalty. You still owe income tax, but the 20% penalty is gone. This matters if you switch to a different type of health plan or lose coverage.

How to use HSA money for future medical expenses

One of the biggest advantages of an HSA is that you can let the money sit and grow. You do not have to spend it in the year you contribute it. This means you can withdraw money years later to pay for a medical expense that happened years ago, as long as the expense happened after you opened the account.

For example, if you had dental work done in 2020 but did not withdraw the money then, you can withdraw it in 2024 and it will still be a may have access to expense. You just need to keep the receipt or bill from 2020 to prove when the expense occurred.

Some people use this strategy to let their HSA grow like a retirement account, paying medical expenses out of pocket and saving the receipts. Then they withdraw from the HSA years later. This is legal and common, though you must keep records of the original expenses.

What to do if you need the money but are not sure it qualifies

If you are unsure whether an expense qualifies, contact your HSA provider or ask your tax preparer before you withdraw. The IRS publishes a detailed list of may have access to expenses on its website, and your provider's customer service can usually answer specific questions.

If you withdraw money and later realize it was not may have access to, you can sometimes put the money back into the account within a certain time frame, though rules vary by provider. Ask your provider about their recontribution policy.

When in doubt, it is safer to pay for the expense out of pocket and leave the HSA money untouched. You can always withdraw it later if you need it for a medical expense you are confident qualifies.

Frequently Asked Questions

Can I withdraw HSA money to pay my health insurance deductible?

Yes. Deductibles are may have access to medical expenses. You can use HSA money to pay the deductible itself, and then use it again to pay copays and coinsurance once you have met the deductible. You cannot use it to pay the monthly insurance premium.

What if I withdraw money and then do not use it for medical expenses?

If you withdraw the money but spend it on something non-medical, you owe income tax and the 20% penalty on that amount. The IRS does not care what you actually do with the cash once it leaves the account — they care about your intent when you withdrew it. If you withdraw it for a medical expense but then change your mind, you still owe the tax and penalty.

Do I have to report HSA withdrawals to the IRS every year?

Your HSA provider reports all withdrawals on Form 1099-SA, which goes to the IRS and to you. You report this on your tax return using Form 8889. If all your withdrawals were for may have access to expenses, you do not owe any additional tax. If some were non-may have access to, you report those on Form 8889 and pay the tax and penalty.

Can I withdraw money from my HSA if I change jobs?

Yes. Your HSA is yours regardless of where you work. You can keep the same account, move it to a new provider, or leave it where it is. You can withdraw money whenever you want, as long as you follow the may have access to expense rules.

What happens to my HSA if I die?

The account goes to your estate or beneficiary, depending on what you named in the account documents. If your spouse inherits it, they can treat it as their own HSA. If someone else inherits it, they owe income tax on the full balance, but not the 20% penalty. Check your account documents to see who is listed as your beneficiary.

This guide is for general information only and is not medical, financial, legal, or other professional advice. For decisions specific to your situation, consult a qualified professional. See our Editorial Policy.