You can withdraw money from your HSA at any time, but the IRS has strict rules about what you can spend it on

Yes, you can withdraw money from your HSA whenever you want. There is no waiting period, no approval process, and no limit on how often you withdraw. The catch is that the money must go toward may have access to medical expenses — a specific list the IRS maintains. If you withdraw for something not on that list, you owe income tax on the amount plus a 20 percent penalty, unless you are age 65 or older.

The IRS definition of may have access to medical expenses is narrower than most people think. It covers doctor visits, prescriptions, dental work, and vision care, but not health insurance premiums (with a few exceptions), over-the-counter medications, or cosmetic procedures. The expense must be for you, your spouse, or your dependents, and you must have already paid it out of pocket.

You do not have to withdraw money in the same year you incur the expense. You can pay a medical bill with your own money today, keep the receipt, and reimburse yourself from your HSA five years later — or even longer. This flexibility is one of the HSA's biggest advantages over other savings accounts.

Key Takeaways

  • Withdrawals for may have access to medical expenses are tax-free; withdrawals for anything else trigger income tax plus a 20 percent penalty unless you are 65 or older.
  • may have access to expenses include doctor visits, prescriptions, dental and vision care, and medical equipment, but not most health insurance premiums or over-the-counter drugs.
  • You can reimburse yourself for a medical expense you paid out of pocket years ago, as long as you have a receipt and the expense was incurred after your HSA opened.
  • Your HSA provider sends you a Form 1099-SA each year listing all withdrawals; you report this on your tax return to show which withdrawals were may have access to.

How to actually withdraw money from your HSA

The mechanics depend on your HSA provider. Most large providers — Fidelity, HealthEquity, Lively, and others — let you withdraw online through their website or app. You typically choose the amount, confirm the withdrawal, and the money lands in your linked bank account within one to three business days.

Some HSAs issue a debit card tied to the account. You can swipe it at the pharmacy, doctor's office, or medical supply store, and the charge comes straight from your HSA. This is the fastest method but also the riskiest: if you accidentally use the card for a non-may have access to expense, you have to catch it and report it to your provider to avoid the penalty.

A third option is to request a check from your HSA provider, though this is slower and less common now. A few providers still mail checks, but most have moved to electronic transfers only.

Keep your receipt for every withdrawal, whether it is a debit card purchase, a bank transfer, or a reimbursement to yourself. The IRS does not require you to submit receipts with your tax return, but you must be able to produce them if audited. Many people photograph receipts or save them in a folder on their phone.

What counts as a may have access to medical expense

The IRS publishes a detailed list in Publication 502. Here are the most common may have access to expenses:

  • Doctor, dentist, and vision care visits (including copays and deductibles)
  • Prescription medications
  • Insulin and other diabetes supplies
  • Mental health and therapy services
  • Dental work, including cleanings, fillings, crowns, and orthodontia
  • Eyeglasses, contact lenses, and eye exams
  • Hearing aids and batteries
  • Medical equipment like crutches, wheelchairs, and blood pressure monitors
  • Certain over-the-counter items if prescribed by a doctor (like allergy medication or pain relievers)
  • Fertility treatments and adoption-related medical expenses
  • Long-term care services (with limits)

Things that do not count include cosmetic procedures (unless medically necessary, like surgery after an accident), gym memberships, vitamins and supplements (unless prescribed), most over-the-counter medications, health insurance premiums (except COBRA, Medicare, and long-term care insurance), and life insurance.

One common mistake: people assume that because something is sold at a pharmacy, it is a may have access to expense. Sunscreen, toothpaste, deodorant, and shampoo are not may have access to, even if you buy them at CVS. The product must treat or prevent a specific medical condition.

Withdrawals and your tax return

Each year, your HSA provider sends you a Form 1099-SA by January 31. This form lists every withdrawal you made during the previous year. You report this on your tax return using Form 8889, which is the HSA tax form.

On Form 8889, you report the total amount withdrawn and the amount that was for may have access to expenses. If all your withdrawals were may have access to, you report the full amount and owe no additional tax. If some withdrawals were not may have access to, you report only the may have access to amount, and the non-may have access to portion is added to your taxable income plus the 20 percent penalty.

The IRS does not verify your expenses automatically. You do not attach receipts to your return. But if you are audited, the IRS will ask to see them. If you cannot produce a receipt, the withdrawal is treated as non-may have access to, and you owe the tax and penalty retroactively, plus interest.

One exception: if you are age 65 or older, you can withdraw money for any reason without penalty. You still owe income tax on non-may have access to withdrawals, but not the 20 percent penalty. This makes the HSA function like a regular savings account once you reach 65.

Reimbursing yourself from past expenses

You do not have to withdraw money in the year you pay a medical bill. You can pay out of pocket and save the receipt, then withdraw from your HSA later to reimburse yourself. There is no time limit, as long as the expense was incurred after your HSA was opened.

This strategy is useful if you want to let your HSA grow as an investment. You pay medical expenses with your regular paycheck or savings, keep the receipts, and leave the HSA untouched to earn interest or investment returns. Years later, when you need cash, you withdraw and reimburse yourself for expenses you paid long ago.

The IRS does not require you to reimburse yourself in any particular order or time frame. You can reimburse yourself for a 2015 expense in 2024 if you still have the receipt. Just make sure the expense was incurred after your HSA opened and that it was a may have access to expense at the time it occurred.

What happens if you withdraw for a non-may have access to expense

If you withdraw $500 for a non-may have access to expense, you owe income tax on that $500 at your marginal tax rate, plus a 20 percent penalty ($100). So if you are in the 22 percent tax bracket, you owe $110 in tax plus $100 in penalty, for a total of $210 on a $500 withdrawal — a 42 percent hit.

You report this on Form 8889 when you file your tax return. The non-may have access to amount is added to your taxable income for the year. If you do not report it, and the IRS catches it during an audit, you owe the tax, penalty, and interest on top.

Some people accidentally use their HSA debit card for a non-may have access to expense — say, buying sunscreen at the pharmacy. If you catch it quickly, contact your HSA provider and ask them to reverse the transaction. If they reverse it, there is no tax consequence. If you do not catch it or the provider will not reverse it, you must report it as a non-may have access to withdrawal on your tax return.

HSA withdrawals and Medicare

Once you enroll in Medicare, you can no longer contribute to your HSA. However, you can still withdraw money for may have access to medical expenses, and those withdrawals remain tax-free. You can also withdraw for Medicare premiums, which are normally not may have access to expenses for people under 65.

Specifically, you can use your HSA to pay Medicare Part B and Part D premiums, as well as premiums for Medicare Advantage plans and long-term care insurance. You cannot use it for Medigap (supplemental insurance) premiums, though some people confuse the two.

Once you turn 65, the 20 percent penalty goes away. Non-may have access to withdrawals are still subject to income tax, but not the penalty. This is why many people view the HSA as a retirement account after 65 — it becomes a tax-deferred savings account with no penalty for non-medical withdrawals.

Frequently Asked Questions

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

Not usually. Withdrawals for regular health insurance premiums are not may have access to. However, you can withdraw for COBRA premiums, Medicare premiums (Part A, B, and D), Medicare Advantage premiums, and long-term care insurance premiums. Check with your HSA provider if you are unsure whether your specific premium qualifies.

What if I withdraw money and then realize it was not a may have access to expense?

Contact your HSA provider when ready and ask them to reverse the transaction. If they reverse it within a few days, there is no tax consequence. If you cannot reverse it, you must report it as a non-may have access to withdrawal on your tax return and pay income tax plus a 20 percent penalty on the amount.

Can I withdraw HSA money to pay for my spouse's medical expenses?

Yes. may have access to medical expenses for your spouse and dependents count, even if they are not covered under your health plan. You need receipts showing the expense was for them, and the expense must be incurred after your HSA opened.

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

Your HSA provider reports them on Form 1099-SA, which goes to the IRS. You report them on Form 8889 when you file your tax return. If all withdrawals were may have access to, the process is straightforward. If any were non-may have access to, you must report the non-may have access to amount and pay tax plus penalty.

Can I use my HSA to pay for my child's braces?

Yes. Orthodontia is a may have access to medical expense. You can withdraw from your HSA to pay for braces, retainers, and related dental work for yourself, your spouse, or your dependents. Keep the receipt from the orthodontist.