What Happens if You Buy Things with an HSA Card?

Using a Health Savings Account (HSA) card to pay for eligible medical expenses can offer you a convenient way to manage your healthcare costs. When you make a purchase with your HSA card, the payment is directly deducted from your HSA balance, allowing you to access funds allocated for healthcare needs.

However, it's essential to understand the implications of using your HSA card for purchases:

• You can only use your HSA card to pay for qualified medical expenses, such as doctor's visits, prescription medications, and certain medical supplies. Non-eligible purchases may incur penalties and taxes.
• Keep receipts and documentation for all transactions made with your HSA card to substantiate that the expenses were for medical purposes.
• Using your HSA funds for non-medical expenses before the age of 65 may result in paying income tax plus a 20% penalty on the amount used for non-qualified expenses.
• After turning 65, you can use your HSA funds for non-medical expenses without incurring the 20% penalty, but regular income tax will apply.

Utilizing your Health Savings Account (HSA) card to cover qualified medical expenses can simplify how you handle healthcare costs, as funds are taken directly from your HSA balance, making it easy to budget for necessary treatments.

However, it is crucial to be aware of the guidelines surrounding HSA card usage:

• Your HSA card is exclusively for qualified medical expenses, including trips to the clinic, prescribed medications, and particular medical supplies. Using it for non-eligible goods may result in costly penalties and tax implications.
• Always maintain receipts and documentation for each transaction made with your HSA card, as you'll need to prove that these expenses align with qualifying medical needs.
• Accessing HSA funds for anything other than medical expenses before reaching 65 may lead to paying income tax coupled with a 20% penalty on the total amount withdrawn for non-qualified purchases.
• Once you hit 65, you're free to use your HSA funds on non-medical items without incurring the previous 20% penalty; however, you'll still need to pay the regular income tax on those withdrawals.