How Can A Health Savings Account (HSA) Help With Therapy Expenses?

In recent years, more and more people have begun to seek mental health support through in-person or online therapy. However, for many individuals, cost can be a significant concern. One way that some people have found to save on therapy is to use a health savings account (HSA). An HSA is sometimes offered as part of a benefits package through an employer, and it typically allows people to save pre-tax dollars that can be used for eligible medical expenses—which often include out-of-pocket expenses for mental health care. Keep reading to learn more about HSAs and how they might help you reap tax savings on online mental health care and therapy expenses. 

What is a health savings account (HSA) for those with a high-deductible health plan?

How an HSA works day to day

An HSA works to ensure funds are available for short-term and long-term medical expenses on a pre-tax basis. Each account is different and may function based on individual circumstances. Generally, pre-tax contributions are made via employee-elected payroll deductions and deposited into an employee’s account. These deductions are subtracted from your taxable income or gross income. 

Funds in a health savings account never expire, and you can roll them over year after year, even if you change health plans. After you reach a certain balance, you can begin investing in a mutual fund or stocks and bonds through HSA trustees. 

The tax advantages of using an HSA

For those interested in a tax deduction, there are significant tax advantages to using an HSA for health care expenses. In fact, HSA holders enjoy triple tax savings: They can contribute tax-free dollars into their health savings account, and when these funds are needed, they also enjoy tax-free distributions. No federal, state, or FICA taxes are charged. Additional tax savings occur in the meantime, since any interest earned is also tax-deductible. For more information, contact a tax advisor. 

How is an HSA different from a flexible spending account (FSA)?

In contrast to an HSA, some people may have a flexible spending account, also called a flexible spending arrangement (FSA) in the Internal Revenue Code. This account is usually for those who have an insurance plan other than a Marketplace plan. Like an HSA, an FSA can be used to set aside money with a financial institution, tax-free, to pay for various medical expenses not covered by a health plan. There are different types of FSAs, so it may be important to look at the terms and conditions to confirm that a specific FSA can be used for therapy. 

How much can you save on therapy expenses with a tax-free HSA?

The amount that you can save with an HSA is typically equivalent to the money you save on taxes by putting money into such an account. HSA funds generally don’t expire, so you can use the funds even in retirement. This may allow for significant savings when medical or mental health expenses arise. 

Contribution limits and how to avoid penalties

Most HSAs have a limit on the amount that you can contribute each calendar year, referred to as the maximum contribution. In 2026, the maximum limit for individual accounts is $4,400 per year. This is for self-only coverage. For family coverage, the limit is $8,750 per year. In a family account, the funds can typically be used for the main account holder and their dependents (i.e., people who are included on someone else’s tax return). Those individuals ages 55 and over who are not Medicare recipients may make catch-up contributions up to an additional $1,000 per year. Applicable taxes and penalties will apply to any excess contribution. 

Documentation and reimbursements

Avoiding penalties with a health savings account is usually a matter of keeping detailed records. This means you’ll need to maintain documentation of all medical services, including:

• prescription medications
• mental health care
• visits to the doctor’s office

All tax-free distributions to reimburse qualified medical expenses must also be documented. 

Can family members contribute to a health savings account (HSA) for mental health expenses?

Anyone can contribute to an HSA. This means that friends and family members can put money into an account to help a person cover mental health expenses. During mental health challenges, some people experience interruptions to their work and income flow, so family members may step in and contribute to mental health care costs by adding funds to a person’s HSA. Furthermore, the interest and other earnings from an HSA are not taxable, which is an additional advantage of using these accounts to save for mental health care. 

Can retirees use health savings accounts?

Once an individual enrolls in Medicare, they can no longer contribute to a health savings account. However, they can still use funds in an HSA to cover expenses not covered by Medicare or Medicare Supplement Insurance. This may help retirees who are seeking support for various mental health challenges.

Who is eligible for an HSA?

In order to be eligible for a health savings account, individuals must be covered under a high-deductible health insurance plan. These plans have a higher annual deductible than most other insurance plans, and your HSA may have a minimum annual deductible requirement. The health savings account can offset these expenses for eligible employees while also paying for other medical expenses, including preventative services. 

Eligibility for a health savings account also forbids individuals from having other types of health insurance coverage, including a standard PPO. Being a dependent also disqualifies some people from opening a health savings account. 

Can an HSA be inherited, and what are the tax implications?

When a person passes away, they can leave their HSA funds to their spouse. This may allow them to use funds for mental health support. If an HSA goes to someone other than a person’s spouse, that person typically has to withdraw the funds and pay income tax on them.  

What expenses can you pay for with an HSA?

There may be a wide range of eligible medical expenses you can pay for with an HSA. Generally, qualified medical expenses include:

• Routine doctor’s visits
• Prescription medications required for medical care
• Preventative services
• Dental care
• Vision care

Both in-network and out-of-network services may be eligible. Other medical services may be covered depending on your specific plan. 

Using an HSA for therapy and mental healthcare

It’s possible to use an HSA for mental health care expenses, including therapy and medical care from a psychiatrist. However, you may need documentation from your primary care provider indicating that these medical services are necessary. Usually, any out-of-pocket expenses you incur can be reimbursed through your HSA. 

Can you use an HSA to pay insurance premiums?

Health insurance premiums are not generally considered qualified medical expenses under a health savings account, but there may be exceptions. For example, if you’re currently unemployed and receiving unemployment compensation, you can pay premiums using your HSA. You can also pay certain types of premiums with your HSA regardless of your employment status, including:

• Medicare premiums
• COBRA premiums
• Premiums for long-term care insurance

Online therapy and HSAs

Online therapy platforms like BetterHelp accept HSA/FSA cards and are recognized as an eligible expense by most HSA/FSA providers. Individuals might consider speaking with an account specialist and/or tax expert about any repercussions for federal or state taxes, but these accounts typically allow people to save on taxes when paying for mental health and medical services.

Getting started with online therapy

Whether you plan to use an HSA, FSA, or pay out of pocket, getting started with BetterHelp is easy. Simply fill out the brief onboarding questionnaire about your needs and preferences in a therapist. You can then be matched with a licensed therapist, who you can meet with via phone, video, or live chat

What the research says about online therapy

In many cases, online therapy can be as effective as in-person therapy for treating common mental health concerns, and a growing body of research supports this. For example, consider a 2021 study suggesting that online therapy may be “no less efficacious” than in-person therapy in many cases.

How to use FSA/HSA on the BetterHelp platform

Did you know BetterHelp accepts FSA/HSA cards and is recognized as an eligible expense by most providers? Don’t let your dollars go to waste and invest in your mental health in a tax-advantaged way before the year ends. For FSAs, remember “use it or lose it” when it comes to paying for medical services: consider applying remaining funds before the year ends. Because some FSA plans don’t allow subscription charges, try charging your FSA card first; if that method doesn't work, you should be able to fund your account with a personal card and submit itemized receipts for each session (sessions are usually FSA-approved). To explore using your FSA/HSA funds on online therapy platforms to support your mental health, we recommend checking with your employer/benefits administrator to confirm coverage.

Insurance coverage for online therapy

Some BetterHelp therapists can accept insurance for online therapy sessions, but this depends on the state where they practice. BetterHelp is currently working with select insurers to join their networks so that more people can receive coverage for online therapy. In the meantime, some people may be able to use HSAs and FSAs for online therapy services. The cost of online therapy at BetterHelp tends to be comparable to that of traditional in-person therapy without insurance coverage, and financial aid may also be available to qualifying individuals.