What Happens If You Use HSA for Non-Medical Expenses?

Many people are not aware that Health Savings Accounts (HSAs) are intended for medical expenses only. What happens if you use your HSA for non-medical expenses?

If you use your HSA for non-medical expenses, you could face penalties and tax implications. Here's what you need to know:

• HSAs are designed to help you save money for qualified medical expenses.
• Using your HSA for non-medical expenses is considered a non-qualified distribution.
• If you withdraw funds for non-medical purposes before you turn 65, you will be subject to a 20% penalty in addition to paying income tax on the amount withdrawn.
• After you turn 65, you can still use your HSA for non-medical expenses, but you will only pay income tax on the amount withdrawn without the additional penalty.
• It's important to keep accurate records of your HSA transactions to avoid any confusion or mistakes.

It's crucial to remember that Health Savings Accounts (HSAs) are primarily intended for medical expenses. If you make the mistake of withdrawing funds for non-medical expenses, the consequences can be significant, including taxes and penalties.