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Using an HSA for Therapy, Counseling & Mental Health

Published: May 19, 2020 Updated: March 14, 2023
Published: 05/19/2020 Updated: 03/14/2023
Headshot of Laura Handrick
Written by:

Laura Handrick

Dena Westphalen, PharmD
Reviewed by:

Dena Westphalen

PharmD
  • What Is a Health Savings Account?What It Is
  • Mental Health Care That Is Typically HSA-EligibleHSA-Eligible Care
  • What Mental Health Care May Not Be HSA-EligibleWhat's Not Eligible
  • How to Determine What Mental Health Benefits Are HSA-EligibleDetermine Eligibility
  • Where Do I Find What Mental Health Expenses are HSA Eligible?Find Out What's Eligible
  • HSA Payment / Reimbursement OptionsPayment Options
  • Full List of HSA-Eligible Mental Health ResourcesResources
  • Additional ResourcesResources
Headshot of Laura Handrick
Written by:

Laura Handrick

Dena Westphalen, PharmD
Reviewed by:

Dena Westphalen

PharmD

Funds from a Health Savings Account (HSA) can be used for mental health care by offsetting the cost of therapy appointments, hospital co-pays, prescriptions and more. These tax-advantaged accounts are gaining in popularity, with estimates showing that there are now 25 million health savings accounts open in the US, most of them opened since 2015.1

Health Savings Account (HSA) – Enjoy Triple Tax Savings

Lively HSAs are fee-free for individuals and families. Sign up today and start saving for your health.

Choosing Therapy partners with leading mental health companies and is compensated for marketing by Lively.

Visit Lively

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.

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 year-end is forfeited and returned to your employer.

Who Is Eligible for an HSA?

Individuals enrolled in a high-deductible health insurance plan can contribute to an HSA. In 2020, individuals can contribute up to $3,550 to their HSA and couples and families can contribute up to $7,100. In 2018, three out of every ten employees had an HSA, yet only 14% contributed the maximum amount.1

How Can an HSA Be Used for Mental Health Care?

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 for therapy.

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

Mental Health Care That Is Typically HSA-Eligible

What’s great about using your HSA for mental health is that it covers nearly every imaginable behavioral therapy you or your family might have. For example, if your traditional health insurance plan doesn’t cover a particular type of therapy or medication, it’s likely you can pay for it using HSA funds instead.

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:

Examples of what’s typically covered as an eligible HSA expense:4

  • Behavioral counseling, psychotherapy visits, and psychiatric appointments
  • Couples and family counseling, including group therapy
  • Prescription and over-the-counter medications5
  • Mental and behavioral health assessments, evaluations, and tests
  • Inpatient substance abuse treatment programs, including smoking cessation
  • Psychiatric hospitalization
  • In-home mental health support services and life-care services for mentally disabled individuals
  • Alternative therapies, like acupuncture
  • Services to help your child with learning disabilities, for example, special education
  • Lodging and meal costs if you have to travel to obtain mental health services
  • Health insurance premiums in some instances (i.e., while collecting unemployment)
  • Co-pays and deductibles for any of the items listed above

What Mental Health Care May Not Be HSA-Eligible

Most mental health needs can be paid for with your HSA funds, including therapy appointments and medications. 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

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.

In addition, using an HSA for therapy saves you money on taxes for expenses you’d likely pay anyhow. Plus, you can use it to pay for mental health support beyond what’s traditionally provided by insurance. For example, your health insurance plan might not cover treatment for sex addiction or gambling, but related therapy expenses would be covered by your HSA for mental health under the broadest definition of psychiatric care.6

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 that 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.

Health Savings Account (HSA) – Enjoy Triple Tax Savings

Lively HSAs are fee-free for individuals and families. Sign up today and start saving for your health.

Choosing Therapy partners with leading mental health companies and is compensated for marketing by Lively.

Visit Lively

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.

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.

Do I Need to Keep Receipts for HSA Expenses?

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.

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

Additional Resources

Education is just the first step on our path to improved mental health and emotional wellness. To help our readers take the next step in their journey, Choosing Therapy has partnered with leaders in mental health and wellness. Choosing Therapy may be compensated for marketing by the companies mentioned below.

Online Therapy 

BetterHelp – Get support and guidance from a licensed therapist. BetterHelp has over 20,000 therapists who provide convenient and affordable online therapy.  Complete a brief questionnaire and get matched with the right therapist for you. Get Started

Online Psychiatry

Hims / Hers – If you’re living with anxiety or depression, finding the right medication match may make all the difference. Get FDA approved medication prescribed by your dedicated Hims / Hers Healthcare Provider and delivered right to your door. Plans start at $25 per month (first month). Get Started

Medication + Therapy

Brightside Health – Together, medication and therapy can help you feel like yourself, faster. Brightside Health treatment plans start at $95 per month. United Healthcare, Anthem, Cigna, and Aetna accepted. Following a free online evaluation and receiving a prescription, you can get FDA approved medications delivered to your door. Free Assessment

Starting Therapy Newsletter

A free newsletter for those interested in learning about therapy and how to get the most benefits out of therapy. Get helpful tips and the latest information. Sign Up

Choosing Therapy Directory 

You can search for therapists by specialty, experience, insurance, or price, and location. Find a therapist today.

Choosing Therapy partners with leading mental health companies and is compensated for marketing by BetterHelp, Hims / Hers, and Brightside.

For Further Reading

  • Mental Health America
  • National Alliance on Mental Health
  • MentalHealth.gov
7 sources

Choosing Therapy strives to provide our readers with mental health content that is accurate and actionable. We have high standards for what can be cited within our articles. Acceptable sources include government agencies, universities and colleges, scholarly journals, industry and professional associations, and other high-integrity sources of mental health journalism. Learn more by reviewing our full editorial policy.

  • Employee Benefits Research Institute (2019, Dec 5) Health Savings Account Balances, Contributions, Distributions, and Other Vital Statistics, 2018: Statistics From the EBRI HSA Database retrieved from https://www.ebri.org/content/health-savings-account-balances-contributions-distributions-and-other-vital-statistics-2018-statistics-from-the-ebri-hsa-database

  • Healthcare.gov (2020) High Deductible Health Plan retrieved from https://www.healthcare.gov/glossary/high-deductible-health-plan/

  • IRS Publication 969 (2019) Health Savings Plans and Other Tax-Favored Health Plans retrieved from https://www.irs.gov/pub/irs-pdf/p969.pdf

  • Health Agents (2019) What Are Qualified Medical Expenses I Can Pay for With My HSA Account retrieved from https://help.ihealthagents.com/hc/en-us/articles/225001688-What-are-Qualified-Medical-Expenses-I-Can-Pay-for-With-My-HSA-Account-

  • IRS.gov (2020) ACA Questions and Answers on Over the Counter Medications and drugs retrieved from https://www.irs.gov/newsroom/affordable-care-act-questions-and-answers-on-over-the-counter-medicines-and-drugs

  • NCBI (2013) Non-substance addictive behaviors in the context of DSM-5, retrieved from

    https://www.ncbi.nlm.nih.gov/pmc/articles/PMC3858502/

  • Healthinsurance.org (2017) Glossary/In-network retrieved from https://www.healthinsurance.org/glossary/in-network/

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Headshot of Laura Handrick
Written by:

Laura Handrick

Dena Westphalen, PharmD
Reviewed by:

Dena Westphalen

PharmD
  • What Is a Health Savings Account?What It Is
  • Mental Health Care That Is Typically HSA-EligibleHSA-Eligible Care
  • What Mental Health Care May Not Be HSA-EligibleWhat's Not Eligible
  • How to Determine What Mental Health Benefits Are HSA-EligibleDetermine Eligibility
  • Where Do I Find What Mental Health Expenses are HSA Eligible?Find Out What's Eligible
  • HSA Payment / Reimbursement OptionsPayment Options
  • Full List of HSA-Eligible Mental Health ResourcesResources
  • Additional ResourcesResources
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