3 Little-Known Ways to Use Your HSA for Mental Health

A health savings account (HSA) is about as unique a savings account as you'll find. Money squirreled away in an HSA can be invested in a variety of stocks and bonds, deducted from your gross income, and finally used toward eligible medical expenses. So if your medical expenses are typically significant, depositing cash in an HSA could help reduce your tax bills.

But what many HSA holders don't realize is that they can use their HSA to cover numerous mental health expenses. The line between what's eligible and what isn't can be murky (we'll get to that below), but in general here are three ways you can use your HSA for mental health.

1. Psychotherapy and counseling for diagnosed conditions

If you're diagnosed with a mental health condition -- such as bipolar disorder, depression, or post-traumatic stress disorder -- the IRS will let you use HSA funding to cover your psychotherapy sessions.

To qualify, the therapy must be deemed a medical necessity by a doctor or mental health professional. Often, that means a doctor has diagnosed you with a mental health condition and has given you a letter of medical necessity (LMN) prescribing the therapy. That also means many popular therapy sessions, such as marriage and family counseling and therapy for general stress, are ineligible.

In addition to therapy itself, you can also cover numerous costs associated with therapy, such as:

• Parking and tolls: If you encounter tolls on the route to your therapist, or have to pay for parking, your HSA might cover them.
• Public transportation: You can use your HSA to cover bus fare, trams, or ride sharing. You'll need to keep proper documentation to show the IRS you're using your HSA for medical purposes.
• Gas: The IRS might reimburse you for "medical miles," meaning the miles you drive to get to therapy, which is currently $0.22 per mile. However, to qualify, you must choose to itemize deductions on your tax return rather than take the standard deduction.

Finally, an HSA doesn't just cover psychotherapy. It might also cover sessions with professionals and therapists, including:

• Acupuncture
• Ketamine treatment
• Inpatient treatments
• Massage therapy
• Psychiatric care
• Sleep therapy

2. Prescribed medications

If a medical professional prescribes medication for a mental health condition, then you can use your HSA to pay for it. Some of the most common eligible prescriptions include:

• Celexa
• Luvo
• Prozac
• Ritalin
• Xanax
• Zoloft

3. Fitness or health club memberships

Sometimes medical professionals will recommend exercise as a part of your mental health treatment. If they do, you're in luck: your fitness or health club membership dues can be paid for with HSA funds. So long as you have a letter of medical necessity from your doctor, you can use your HSA to cover fitness-related expenses.

What if you use your HSA for non-qualifying expenses?

If you use your HSA to cover non-qualifying mental health expenses before the age of 65, the IRS will charge a 20% penalty on the amount withdrawn. In addition, the money will be taxable income and will add to your total income when you file taxes.

You can avoid penalties, however, just by asking your HSA provider ahead of time if an expense is eligible. A good rule of thumb is that if your doctor has recommended it -- and you have a letter of medical necessity to prove it -- then you can pay for it with your HSA.

Likewise, if you're paying for certain mental health expenses, like therapy, out of pocket, it's worth exploring if you're eligible for an HSA account. You can save on taxes, earn money within the HSA tax-free, and withdraw it without paying taxes -- a triple tax benefit that could help your personal finances as much as it does your mental health.