Out-of-network costs can be reimbursed from your HSA, but only if they are may have access to medical expenses under IRS rules — and the insurance plan you're using matters

Whether an out-of-network bill qualifies for HSA reimbursement depends on two things: whether the expense itself is a may have access to medical expense, and whether your health insurance plan allows you to be reimbursed for out-of-network care at all. The IRS does not distinguish between in-network and out-of-network providers when deciding what counts as a may have access to expense. A doctor visit, prescription, or medical test is either a may have access to expense or it is not, regardless of whether you saw an in-network provider. However, your insurance company may refuse to pay its share of an out-of-network bill, or may pay a smaller share, which changes what you can reimburse yourself from your HSA.

The key rule: you can only reimburse yourself from your HSA for amounts that your insurance plan does not cover. If your plan does not cover out-of-network care at all, the entire bill is yours to pay, and you can use your HSA to pay it. If your plan covers out-of-network care but at a lower rate than in-network care, you pay the difference yourself, and that difference can come from your HSA. You cannot use your HSA to reimburse yourself for amounts your insurance already paid.

Key Takeaways

  • Out-of-network expenses are may have access to medical expenses if the service itself qualifies (doctor visits, prescriptions, lab work, surgery), regardless of the provider's network status.
  • You can only reimburse yourself from your HSA for the portion of the bill that your insurance plan does not cover.
  • Some plans cover out-of-network care at a lower percentage than in-network care, leaving you responsible for a larger share that HSA funds can cover.
  • Some plans do not cover out-of-network care at all unless it is an emergency, in which case the full bill can be paid with HSA funds.
  • You must keep the original bill, the insurance explanation of benefits, and proof of payment to document that the expense was not already covered by insurance.

How insurance coverage affects what you can reimburse

Your health insurance plan determines how much of an out-of-network bill it will pay. Most plans use one of three approaches: they cover out-of-network care at the same rate as in-network care, they cover it at a lower rate, or they do not cover it at all (except in emergencies).

If your plan covers out-of-network care at the same rate as in-network care, you still have to meet your deductible and pay coinsurance or copays just as you would in-network. The difference is that out-of-network providers often charge more than in-network rates. If a provider charges $200 and your plan would normally pay 80 percent of an in-network visit, your plan pays 80 percent of $200 (or whatever it considers the "allowed amount"), and you owe the rest. That remainder can come from your HSA.

If your plan covers out-of-network care at a lower rate — for example, 60 percent instead of 80 percent — you pay the higher coinsurance yourself. That extra 20 percent difference, plus any amount above the plan's allowed amount, can be reimbursed from your HSA.

If your plan does not cover out-of-network care except in emergencies, the entire non-emergency bill is your responsibility, and you can pay it with HSA funds. Emergency out-of-network care is usually covered at the same rate as in-network emergency care, even in plans that otherwise exclude out-of-network providers.

may have access to medical expenses that work out-of-network

The IRS maintains a list of may have access to medical expenses. These are the same whether you see an in-network or out-of-network provider. Common may have access to expenses include doctor visits, dentist visits, eye exams, prescription medications, medical equipment (like crutches or wheelchairs), and lab work or imaging ordered by a doctor.

Some expenses that people assume are may have access to are not. Cosmetic procedures, over-the-counter medications (unless prescribed by a doctor), gym memberships, and general wellness products do not count as may have access to expenses, even if you pay an out-of-network provider. The expense has to be for diagnosis, treatment, or prevention of a specific medical condition.

If you are unsure whether a specific out-of-network service qualifies, you can check IRS Publication 502, which lists may have access to and non-may have access to medical expenses in detail. Your HSA custodian (the bank or financial company that holds your HSA) can also answer questions about whether a specific bill qualifies.

Documentation you need to keep

To reimburse yourself from your HSA for an out-of-network expense, you need to keep three pieces of paper: the original bill from the provider, the explanation of benefits from your insurance company, and proof that you paid the bill. The explanation of benefits shows what your insurance paid and what you owe. Without it, you cannot prove that the expense was not already covered by insurance.

If you are reimbursing yourself months or years after the expense (which is allowed under HSA rules), these documents become even more important. The IRS does not require you to submit receipts when you withdraw money from your HSA, but you must be able to produce them if the IRS audits your tax return. Keep them for at least three years after the year in which you took the deduction.

If your insurance company denied the claim entirely, keep the denial letter as well. This shows that the expense was not covered by insurance and therefore the full amount is your responsibility.

Emergency out-of-network care and HSA reimbursement

Emergency out-of-network care is treated differently by most insurance plans. Even plans that do not normally cover out-of-network providers will usually pay for emergency services at the same rate as in-network emergency care. This is required by federal law in most cases.

However, "emergency" has a specific meaning in insurance. It usually means a sudden, serious medical condition that requires when ready treatment to prevent serious harm or death. A planned surgery at an out-of-network facility, even if you could not get an appointment in-network, is not an emergency. A car accident injury treated at the nearest hospital, even if that hospital is out-of-network, is an emergency.

If you receive emergency out-of-network care, your insurance explanation of benefits will show how much it paid and how much you owe. You can reimburse yourself from your HSA for your share, just as you would for any other out-of-network expense. Keep the emergency room bill and the explanation of benefits to document the expense.

Out-of-network bills and your deductible

Out-of-network expenses count toward your health insurance deductible, but the amount that counts depends on your plan. If your plan has a single deductible that applies to both in-network and out-of-network care, an out-of-network bill counts the same way an in-network bill does. If your plan has separate deductibles for in-network and out-of-network care, the out-of-network bill counts only toward the out-of-network deductible.

Some plans have an out-of-network deductible that is higher than the in-network deductible. This means you have to pay more out-of-pocket before your insurance starts paying for out-of-network care. Until you meet that deductible, you pay the full bill yourself, and you can use your HSA to cover it.

Once you meet your deductible, your insurance pays its share, and you pay coinsurance or copays. The amount you pay after meeting the deductible can also come from your HSA. Your insurance explanation of benefits will show how much of your bill counted toward your deductible and how much your insurance paid.

Frequently Asked Questions

Can I use my HSA to pay an out-of-network bill before I submit it to insurance?

Yes. You can pay the bill with your HSA debit card or by withdrawing cash from your HSA and paying the provider directly. You do not have to wait for insurance to process the claim first. However, you still need to submit the bill to your insurance company and keep the explanation of benefits. If your insurance pays any portion of the bill after you have already paid it from your HSA, you cannot get that money back into your HSA — it is gone.

What if my out-of-network provider charges more than my insurance plan's allowed amount?

Your insurance plan pays based on its "allowed amount," which is usually less than what the provider charges. You are responsible for the difference between what the provider charges and what your insurance pays. That difference can come from your HSA. This is called balance billing, and it is one reason out-of-network care often costs more out-of-pocket.

Does an out-of-network expense count toward my out-of-pocket maximum?

Yes, but only the amount your insurance plan allows counts toward your out-of-pocket maximum. If your provider charges $500 but your plan's allowed amount is $300, only the $300 counts toward your maximum. The extra $200 you pay does not count, even though you paid it. This is another reason to check your plan's allowed amounts before seeing an out-of-network provider.

Can I reimburse myself from my HSA for an out-of-network bill my insurance denied?

Yes, if the service itself is a may have access to medical expense. If your insurance denied the claim because the provider is out-of-network, you can still pay the bill with your HSA. If your insurance denied the claim because the service is not covered (for example, a cosmetic procedure), you cannot use your HSA to reimburse yourself, because it is not a may have access to expense.

Do I need to get pre-approval from my insurance company before seeing an out-of-network provider?

Some plans require pre-authorization for out-of-network care, and some do not. Check your plan documents or call your insurance company before your appointment. If your plan requires pre-authorization and you do not get it, your insurance may refuse to pay anything, leaving you responsible for the full bill — which you can then pay from your HSA. However, getting pre-authorization does not may provide your insurance will pay; it only confirms that the service is covered if you meet other requirements like deductibles.