When Can You Withdraw from HSA for Non-Medical Expenses?

Health Savings Accounts (HSAs) are a valuable tool for saving and paying for medical expenses, but there are rules around when you can withdraw funds for non-medical purposes.

While the primary purpose of an HSA is to cover qualified medical expenses, there are situations in which you may need to withdraw funds for other reasons. Here are some instances when you can withdraw from your HSA for non-medical expenses:

• Retirement: You can withdraw funds from your HSA penalty-free for non-medical expenses once you reach age 65. However, you will still owe income tax on the withdrawn amount.
• Disability: If you become disabled and are unable to work, you can use your HSA funds for non-medical expenses without facing a penalty.
• End of HSA eligibility: If you no longer qualify to contribute to an HSA (e.g., you switch to a non-HDHP health plan), you can still use the remaining funds in your HSA for non-medical expenses.
• Anytime: While it's generally advisable to save HSA funds for medical costs, you can withdraw money for non-medical expenses at any time. However, withdrawals for non-qualified expenses before age 65 will incur a 20% penalty in addition to income tax.

It's essential to understand the rules and penalties around withdrawing from your HSA for non-medical expenses to make informed decisions about your healthcare savings.

Understanding when you can withdraw from your Health Savings Account (HSA) for non-medical expenses is crucial for your financial planning. While HSAs are designed to help cover medical costs, sometimes life circumstances lead you to need those funds for other purposes.