A health savings account (HSA) can be a great way to help pay for health care expenses, including the cost of your mental health care, which comes in handy if you can’t afford therapy. There are many benefits to using an HSA, including that the money you invest in it isn’t subject to federal or state income taxes, both when you put it in and when you take it out for a qualified medical expense.
You can even invest funds within an HSA, and the appreciation and dividends earned are also tax-free. In addition, you aren’t required to take your money out of the fund when you get older, as you are with many other retirement investment products.
Using your HSA funds for medical expenses is pretty clear-cut. If you have a doctor’s appointment, need a prescription, or are going to have surgery, those are all qualified expenses. Your HSA funds can be used to pay for them. The situation gets a little murkier, though, when it comes to using your HSA for therapy and other mental health care services, as some expenses are covered and others are not.
Can You Use HSA for Therapy?
Is therapy covered by HSA? The answer to this is “it depends.” According to the IRS, you can only use your HSA funds for in-person or online therapy that’s considered medically necessary.
The rules state that: “Medical or mental health therapy is eligible for reimbursement with a flexible spending account (FSA), health savings account (HSA), and health reimbursement account (HRA). Therapy not required for a medical or mental purpose will typically not qualify, such as marriage or family counseling.” You might need to provide a letter of medical necessity if you’re audited or requested to.
More succinctly put, if a medical doctor (and that includes a psychiatrist) deems your therapy to be medically necessary, then you may use your HSA funds.
“Read up on the complete rules governing HSA application to therapy. One important note is that you’ll be required to have a ‘billable diagnosis’ as opposed to ‘general’ life stressors. This would be similar to if you were using an insurance benefit.”
What Mental Health Services Can You Use HSA For?
So, is therapy covered by your HSA? Ultimately, it just depends on why you’re seeking treatment. If you’ve been diagnosed with a mental health condition like bipolar disorder, schizophrenia, depression, or borderline personality disorder, then yes, you may use your HSA for therapy.
However, if you’re seeking therapy for a “non-medical” reason, like marriage counseling, grief counseling, or stress management, you won’t be able to use the money in your HSA account for therapy costs.
If your mental health services do qualify as being medically necessary, you can use your funds for several types of treatment.
Acceptable HSA therapy costs can include:
- Psychotherapy session: Psychotherapy (talk therapy) is an essential form of treatment for many types of mental health conditions. Because health insurance doesn’t always cover all of the cost of treatment, using your HSA to pay for the difference can be financially savvy.
- Medication prescribed by a psychiatrist: If your doctor or psychiatrist prescribes medication to treat symptoms of a mental health condition, this would be a qualified expense that you could be reimbursed for.
- Inpatient psychiatric care: Prescription medication that’s prescribed to treat a mental health condition is generally eligible for HSA reimbursement. This can be a welcome relief if you have prescriptions with high co-pay amounts or that your insurance doesn’t cover.
- Mileage allowance: Mileage to travel to and from appointments, as well as the cost of tolls and parking, can be reimbursed by your HSA. You must be diligent about recording the miles so you can verify any travel expense. Only travel related to medically necessary appointments is allowed.
- Transportation: Transportation is an eligible expense that can be covered by an HSA. You might need to document the reason for transportation, which can typically be done through a prescription or a diagnosis.
- Lodging and meal allowance: If you have to travel more than 50 miles away from your home for therapy, your HSA account can reimburse you for up to $50 per person per night.
- Psychiatric care: Psychiatric care is a covered HSA expense because psychiatrists are medical specialists. Both the cost for therapy and medication would be eligible.
- Specialized treatment care: Several types of medical treatment that rely on specialized medical care would be an eligible expense. For example, substance-abuse clinics that offer inpatient treatments would qualify. Acupuncture used for either physical or mental health care treatment might also be allowed. Finally, transportation to get to and from community group meetings or other outpatient sessions, like Narcotics Anonymous (NA) or Alcoholics Anonymous (AA), qualify.
- Gym membership or health club dues: If you have a mental health condition that’s diagnosed, and it’s recommended that you exercise as part of your medical treatment plan, you might be able to get your gym membership reimbursed through your HSA. Note you may need a letter of medical necessity.
- Over-the-counter (OTC) products: Several household products and OTC items are eligible for reimbursement. Many of them you can get directly from the FSA store. OTC products that are specific to mental health care like herbal supplements and a light therapy machine to treat seasonal affective disorder (SAD) could qualify.
Finding Support Through Insurance
If you have medical insurance, you can use your HSA funds for any qualified expense that’s not paid directly to the provider or for which you’re not reimbursed by your insurance company. This includes co-pays and expenses to meet your deductible, as well as any uncovered medical expense.
Your HSA account might not be the first thing you think of when it comes to financing your mental health care. Yet this type of account allows you to reduce your tax liability and pay for your mental health care expenses, using pre-tax funds. For many people, it’s a win-win.
“If you have opened a HSA to help cover future costs of healthcare needs, learning how to apply it towards mental health therapy could pay itself in dividends! Check with your employer to see if they’ll contribute or match funds to your HSA as well.”
If you don’t already have an HSA account, check with your employer and see if they offer a program as part of your benefits package. If not, or if you’re self-employed or unemployed, there are many companies that offer independent HSA plans. Make sure to familiarize yourself with the current IRS rules regarding these accounts.
To qualify for an HSA, you must have a high-deductible health insurance plan. In addition, there’s a limit to how much you can contribute each year. You get to add a “catch up” bonus contribution once you reach age 55, and you can’t contribute to the account once you start receiving Medicare benefits at age 65. (However, you can still use funds in your account indefinitely).
It’s important to find a good therapist and start treatment for any mental health condition as early as possible. If you’re concerned about how you’re going to pay for any of your mental health treatments, tapping into a health savings account can be a great option, especially if you’ve been contributing to the account for several years. Why not use tax-free funds to pay for your mental health care?
For more information on HSA accounts and to learn how you can use them for mental health care services, see:
1. Buy Flexible Spending Account Eligible Items Online from FSA Store. FSA Store carries a plethora of approved and eligible health essentials like first aid, acne & skincare, baby & mom, travel essentials, period care, and more. https://fsastore.com/. Accessed June 10, 2022.
2. Publication 969 (2021), Health Savings Accounts and Other Tax-Favored Health Plans | Internal Revenue Service. Irs.gov. https://www.irs.gov/publications/p969. Accessed June 10, 2022.
3. HSA Health Savings Account – Qualified Medical Expenses (QME). Healthequity.com. https://healthequity.com/hsa-qme. Accessed June 10, 2022.