Can You Use an HSA for Therapy?

What Is a Health Savings Account?

An HSA is a tax-advantaged savings account used to set aside money to pay for physical and mental health care expenses. Those who are enrolled in a high-deductible health insurance plan (HDHP) can use an HSA to set aside pre-tax dollars to spend on health-related needs, making these plans tax-advantaged.

With an HSA, every penny you put into the account (up to the contribution limit) remains yours until you spend it on qualifying health care. Your HSA savings can be invested, similar to 401(k) savings, and grow tax free. When you ultimately need to withdraw funds to cover medical or mental health expenses, those funds remain untaxed.

You can use money from your HSA for therapy visits, hospital stays, and more. That makes it a helpful resource for people exploring mental and behavioral healthcare payment options.

HSA Vs. FSA

As a health savings vehicle, an HSA is often confused with a FlexibleSpending Account (FSA). Both are tax-advantaged savings plans that allow you to set aside pre-tax money from your paycheck to be used to pay for health-related expenses, including mental health needs. But an FSA is an employer provided benefit that doesn’t work like a typical savings account. An FSA has a “use it or lose it” element to it, which means that any money left in the account at the end of the year is forfeited and returned to your employer.

Who Is Eligible for an HSA?

People enrolled in a high-deductible health insurance plan can contribute to an HSA. In 2023, individuals can contribute up to $3,850 to their HSA and couples and families can contribute up to $7,750.⁸ In 2018, three out of every ten employees had an HSA, yet only 14% contributed the maximum amount.¹

What Mental Health Services Can You Use HSA For?

The list of HSA eligible mental health care expenses is much broader than what your traditional mental health insurance may provide using the Diagnostic and Statistical Manual of Mental Disorders (DSM-5). That’s because HSA therapy expenses need only meet the broadest definition of mental and behavioral health needs. Consider these HSA-eligible mental health resources:

Your Therapy Bills

Therapy is a mental health service rendered by a professional, you can definitely use a HSA to pay for therapy bills.

Can You Use HSA for Online Therapy?

As long as the therapy fee is to pay a professional for the diagnosis or treatment of a recognized condition, you can use your HSA for online therapy.

Psychiatric Care

Psychiatrists and other prescribers’ fees for evaluation and ongoing treatments are medically necessary. This standing qualifies them for HSA coverage.

Medications

For many, medications are a primary part of their mental health care. These will be HSA-eligible.

Fitness Programs

Your gym membership and home exercise equipment could be eligible for HSA payment if a medical professional specifically prescribes the fitness program. You always need to justify the expenses, so be sure to keep accurate records.

Meditation & Other Wellness Apps

Meditation and other wellness apps are in an unclear area with HSA. HSA payment requires the service to be offered by a medical professional. Meditation with a therapist would be covered because of the therapist in the room, but if the app does not link you to a professional, it may not be eligible.

Can You Use HSA  for Marriage Counseling?

As long as the marriage counseling involves a specific mental health diagnosis, you can use your HSA. Some marriage counselors may avoid offering a diagnosis for relationship conflict or marital disorder, so be sure your therapist offers a specific diagnosis.

What Mental Health Care May Not Be HSA-Eligible

Unlike health and mental health insurance coverage, there are relatively few limits on what you can use your HSA for within the context of mental health needs. If a mental-health practitioner deems the treatment necessary, it’s likely going to be considered an HSA-eligible expense. However, there are some restrictions on what you can use your HSA for if you wish it to remain a qualified expense and avoid paying taxes on the expense, or paying a 20% penalty.

For example, you can’t use money in your HSA to buy health insurance except in specific situations, and if your psychiatrist suggests you try yoga to help manage depression and anxiety, the cost of the yoga class wouldn’t be considered an eligible expense unless you had a form from your doctor such as a Letter of Medical Necessity (LMN).

Here’s what’s not typically covered in your HSA for mental health:

• Insurance premiums (Except when collecting unemployment or using COBRA benefits)
• Books, music, or movies that help ease your anxiety
• Food like chocolate or ice cream you consume when depressed
• Toys that keep your hyperactive child engaged unless part of a special ed program
• A vacation to the beach to ease your work-related stress
• Vitamins and over-the-counter meds without a doctor’s prescription
• Legal support such as to address custody, marital issues, or drug violations

How Do I Use My HSA to Pay for Mental Healthcare?

In most cases, your health savings account will come with a debit card. That means you can use it at the pharmacy when you’re filling prescriptions. You can use it to pay for deductibles and copays at your provider’s office. Or, you can use it to pay for the entire cost of your counseling appointments if your preferred therapist doesn’t accept your health insurance.

As the money in your HSA account is yours forever, you can use it to pay for health services even after you’ve lost your job and your health insurance. Therefore, there’s little risk in setting aside larger amounts of money in your HSA, and you’ll get tax benefits for doing so. Further, if you don’t use all the funds in your HSA for mental health and medical needs by the time you retire, you can use the money penalty-free for non-medical needs after age 65.³

Where Do I Find What Mental Health Expenses are HSA Eligible?

The complete list of eligible mental health expenses you can pay for with your HSA is the same as those allowed for the purposes of healthcare tax deductions. You can also find information in IRS Publication 969 on Health Savings Accounts and Other Tax-Favored Health Plans.

Fortunately, your insurance provider most likely has easier-to-understand coverage information on their website, and perhaps a chatbot to answer your questions. If you’ve purchased insurance through healthcare.gov, you’ll find mental health coverage information online.

Here are other places where you can find out what’s covered under your HSA:

• HR person: If you’re working for an employer that provides health insurance, ask your HR rep. They can contact the insurance carrier or financial institution to find out.
• Insurance plan documents: Coverage information is provided in your HSA-eligible health insurance documents and within the summary plan description (SPD)
• Provider Website: Most larger insurance carriers and financial institutions that offer health savings accounts will have a list of covered expenses on their website.
• Phone number: Your health saving account documents should provide you with a phone number to contact the HSA administrator to ask if an expense is covered
• Your HSA card: Like a credit card, your HSA debit card most likely has a phone number on it. You can call that number for information on mental health coverage.

How to Determine What Mental Health Benefits Are HSA-Eligible

Your HSA-eligible health insurance documents or HSA documents provided by the financial institution managing your health savings account will provide you with a list of both eligible and ineligible HSA expenses. An eligible expense is one you can use your HSA funds to pay for on a pre-tax basis. (You can use your HSA to pay for non-eligible expenses as well. It’s just that you’ll be taxed, and if you’re under 65, penalized an additional 20%, on those dollars.)

Some retailers, for example, screen the transaction to determine whether your purchase is HSA eligible or not at the point of sale. For example, your pharmacy may accept your HSA card for your prescription co-pay, while not accepting it as payment for another item you purchase at the same time, like an energy drink or nutritional supplements.

Necessity Of Diagnosis or Pre-Approval

As long as the reason for your visit or diagnosis falls under the general umbrella of mental health services, there’s no necessity of diagnosis or pre-approval needed. If you’re concerned that the expense may not be covered, you can request your doctor or psychologist give you a letter stating that the specific treatment is medically necessary.

In addition, you’re not required to provide diagnosis information to the financial institution that manages the money that’s in your HSA. It’s a bit more of an honor system than submitting general insurance claims requiring a DSM-5 diagnosis code. As long as your doctor recommends a medication or mental-health related treatment and you have a receipt for it, it’s likely you’ll be reimbursed.

Patients can always request an invoice or superbill from their therapist. While an invoice may not contain diagnosis information, a superbill will contain a diagnosis code (ICD10 code) and the CPT code for mental health services received.

In-Network Vs. Out-of-Network

When using your HSA for mental health, you can save money working with a mental health provider that’s in your healthcare network. You‘ll typically find a list of in-network providers on your health insurance company’s website, or you can contact the customer service department of your HDHP health insurance carrier to ask whether your therapist or psychiatrist is part of their network.

In-network providers have pre-negotiated rates and often require lower copays.⁷ For example, an in-network therapist may provide you with a one-hour visit for $20. Your copay is $20 while your insurance provider pays the balance. It’s possible an out-of-network provider may charge more for the same visit, or that your insurance provider may require you to pay a larger share of the appointment cost, such as 25% of the visit in addition to the $20 copay.

Here’s an illustrative example:

• In-Network: Visit Costs $100. Insurance pays $80. You pay $20 copay.
• Out-of-Network: Visit costs $120. You pay $20 copay plus 25% of fee, for a total of $45.

An HSA gives you flexibility either way. If you prefer to use an out-of-network provider, or even a therapist who doesn’t accept insurance, you can still see that mental health professional and pay for your visit with pre-tax funds set aside in your HSA.

HSA Payment & Reimbursement Options

Similar to a savings account, your HSA funds are held in a bank or financial institution. You can get access to those funds in several ways. The easiest way to pay for HSA-eligible mental health expenses is at the point of service. Hand the provider your HSA card as payment when you check out. However, some providers don’t accept debit cards. Perhaps you paid cash for a visit, or you simply prefer to pay for mental health expenses yourself and submit them for reimbursement.

How Can I Pay Using HSA Funds?

The easiest way to pay using HSA funds is to use the HSA-debit card provided by the financial institution. Most providers are able to accept your HSA card just like a personal bank card to pay for services. Or, if your mental health provider sends you an invoice, you can call them or pay the bill through the mail using your HSA debit card number.

Pay at the Time of Service

As you check out from your therapy appointment or hospital stay, you can ask them to charge your HSA debit card for the visit or co-pay. Similarly, all major pharmacies accept HSA debit cards to pay for your prescriptions, including Walmart, Walgreens, and RiteAid. You can also provide your HSA debit card number to pay for all or a portion of your mental health-related bill, such as your per-visit co-pay.

Get Reimbursed

If you don’t have your HSA card handy and instead pay for the visit or service yourself, all health savings account providers have a way for you to submit a receipt for reimbursement, assuming it’s a qualified medical or mental health expense. Your HSA plan manager will, at a minimum, have a paper form you can complete, attach the receipt to, sign, and send in for reimbursement.

These days, most HSA providers have an online form for account holders to submit HSA therapy and mental health expenses for reimbursement. You complete the online form, attach the receipt showing what you paid, and they’ll send you a check.

Keep Your Receipts if You Need to Be Reimbursed!

You don’t necessarily need to keep receipts for payments you make using your HSA card, but you’ll want to keep receipts for mental health expenses that need to be reimbursed by your HSA provider manually or online. Those receipts don’t need to be detailed. For example, you could use a hand-written payment receipt from your therapist showing their name, credentials, date of service, and the amount paid.

In fact, if you used a personal credit card, Paypal account, or one of the newer systems like Venmo or Zelle, your electronic payment receipt will suffice for reimbursement. You may have to print a receipt or take a screen capture and submit it to your health saving account provider. Most HSA providers have an online portal for submitting reimbursement requests.

Making the Most of Your Health Savings Account

Not enough people know about and effectively use HSAs. If you feel uncertain or confused about the options available to you, talk to your human resources department. They should be able to offer you a clear explanation of HSA and how you can use it to your advantage.

Full List of HSA-Eligible Mental Health Resources

Most mental health resources from psychiatrists to hospitals will accept your HSA funds as payment. In fact, since you can get most mental health services reimbursed through your HSA, you need not use a provider that accepts your insurance at all. If you’re looking for mental health treatment specifically that’s covered under your HSA plan, consider these resources:

• Treatment options: Substance Abuse and Mental Health Services Association
• Drug and alcohol rehab centers: DrugRehabs.org
• Support groups: Depression and Bipolar Support Groups
• Residential mental health facilities: American Residential Treatment Association
• Mental health providers: Anxiety and Depression Association of America
• Behavioral health for children: Childmind.org
• Dementia service, programs, and referrals: Alzheimer’s Association