HSA Therapy Reimbursement: Tax Benefits And Getting Repaid

Mental health conditions such as anxiety and depression can be challenging to live with, and while therapy can help, many individuals may be concerned about the cost of seeking mental health services. Still, the cost of getting professional help may be more manageable through the use of a Health Savings Account (HSA). By allowing you to use untaxed dollars for medical expenses, HSA therapy reimbursement may offer a way to reduce a person’s overall healthcare costs, including mental health counseling.  The good news is that BetterHelp accepts HSA/FSA cards and is recognized as an eligible expense by most providers.

These accounts have gained popularity in the United States; there were around 25 million HSAs as of 2018. An HSA can help you save on qualifying mental healthcare services, including therapy and psychiatric care. With an HSA, mental health resources may become more affordable for some people, allowing them to manage mental health conditions and improve mental health overall. This article will explain how HSA eligibility works and how HSAs may be used for qualifying therapy expenses.

How does a health savings account work?

A health savings account (HSA) can be a way to save money on medical costs, including physical and mental health care expenses. HSAs are tax-deductibleand may be useful for people who have a high-deductible health insurance plan (HDHP).

When you put money into an HSA, you don't have to pay taxes on it. You also don't have to use the money in your HSA right away; it can be saved for future medical expenses. HSAs can help pay for medical expenses that health insurance or high-deductible health plans might not cover. The government decides which medical expenses qualify. According to the IRS, “you can include in medical expenses amounts you pay for therapy received as medical treatment."

Comparing HSA and FSA

An HSA can be compared to another common medical savings account called a Flexible Spending Account (FSA). Both can be used to set aside pre-tax dollars for medical expenses, but there are key differences:

• HSA funds can roll over from year to year, whereas FSAs typically have a "use it or lose it" rule; unused funds are usually forfeited at the end of each plan year.
• HSAs are only available to those with a high-deductible health plan, whereas FSAs are typically offered through an employer and don't require a specific insurance plan.
• HSA contributions typically have higher annual limits than FSAs, allowing individuals to save more money each year.

Can I use HSA with insurance?

Yes, you can use an HSA alongside health insurance. In fact, an HSA is usually meant to complement a high-deductible health plan (HDHP). While the HDHP provides coverage for larger medical expenses, the HSA can be used to pay for other costs not covered or reimbursed by the insurance plan, such as deductibles, copayments, and coinsurance, for example. Your HSA account can also be used for qualifying medical expenses that may not be covered by insurance, including qualifying mental health care services.

HSA-eligible mental health services

Mental health therapy, when deemed as part of medical treatment, can be an HSA-qualified medical expense, allowing some individuals to use their HSA to cover the cost of treatments or be reimbursed, whether they’re seeking mental health counseling for a diagnosed mental health condition, management of a specific medical condition, or treating substance use disorder. Other services, such as mediation with family members or stress reduction, may not be covered. Below are some examples of mental health services that may be paid for using an HSA.

Mental health therapy

The Internal Revenue Service allows for tax-free spending on a number of medical and mental health treatments. Some individuals may be able to use their HSA funds for a range of mental health services, including psychiatric care, mental health counseling sessions with a licensed therapist, or appointments with a psychologist. These treatments may be used as an HSA-qualified medical expense to manage mental health conditions such as anxiety, depression, or bipolar disorder, for example. HSA funds may also be approved for therapy to target general improvement or to treat mental health symptoms related to specific medical conditions diagnosed by a medical provider. 

If you have a severe mental health condition, you might need to see a psychiatrist for a diagnosis, medication management, and therapy. Psychiatric care can also be an HSA-eligible expense, which may make it easier for you to get the professional help you need.

Sometimes, alternative treatments such as acupuncture may help with medical or mental health challenges. In these cases, you might be able to use your HSA funds to pay for them. This could give you more options for getting the help you need.

If you're ever audited or asked to prove that your therapy was needed for medical reasons, you might need a letter of medical necessity. This letter explains why you need the treatment and can be written by a healthcare provider.

Source

Where to find out what services are HSA-eligible

To determine what would be considered qualified medical expenses under your HSA, you can use the following resources:

• IRS Publication 502: This document from the IRS gives a detailed list of medical expenses that can be covered by an HSA. It includes costs for diagnosing, treating, or preventing medical and mental health problems. 
• HSA administration websites: You can also consult websites related to HSAs or your HSA provider's site. These websites often have information and lists of expenses that are HSA-eligible, including mental health services like therapy.

Eligibility guidelines from the IRS

The Internal Revenue Service allows the tax-free funds in your HSA to pay directly for a wide variety of medical and mental health services that are approved by a medical professional or healthcare provider, explaining the need. 

If you still have questions, you can ask your insurance provider or your employer's human resources (HR) department. You may also want to consult with a tax professional. 

What’s not covered by an HSA

There are certain procedures or treatments that are not typically covered by an HSA. Some of these include:

• Health club dues or fitness programs that are not related to a specific injury or issue
• Life coaching
• Marriage or family counseling
• Personal care that is not related to physical health, including manicures, pedicures, or non-prescribed massage
• Elective cosmetic procedures

Some categories include more specific areas of coverage that may require more scrutiny to determine eligibility. For example, some vision expenses may be covered, while others may not. Sleep aids that are prescribed by a medical provider for general improvement of physical health may be covered, while a natural sleep supplement will not be. 

If you still have questions, you can ask your insurance provider or your employer's human resources (HR) department. You may also want to consult with a tax professional. 

How to get an HSA therapy reimbursement

An HSA can be used to pay directly or reimburse certain qualifying medical expenses. HSA therapy reimbursement refers to using funds from an HSA to reimburse qualified medical expenses that were originally paid for out of pocket. This can often occur when there are insufficient funds in the HSA to pay for the medical expense for yourself or family members at the time of treatment. 

To get reimbursed for therapy using an HSA, you may need to have a high-deductible health insurance plan and an active HSA, and the therapy may need to be considered a medical treatment to manage mental health conditions.

Here are a few tips to keep in mind for how to get an HSA therapy reimbursement:

• Get a detailed receipt for your therapy services. Ideally, this receipt will show the date, the provider's name, and the cost of the session. You might also want to get a Letter of Medical Necessity (LMN) from your healthcare provider, especially if you have a diagnosed mental health condition. This can help show that the therapy was needed for medical purposes.
• Send a reimbursement request to the company that manages your HSA. They might have an online form you can use, or you may be asked to fill out a paper form. Attach the therapy receipt and LMN (if you have one) to the reimbursement form. Even though you don't need to send the LMN with your reimbursement form, it could be important to keep it. You might need it later for taxes or if you get audited.
• Keep track of your HSA reimbursements, and make sure you don't go over the yearly contribution limit. 

It can be important to stay informed about HSA rules. Consider checking the IRS guidelines on eligibility and eligible expenses regularly, since these rules might change over time.

How to get help with HSA reimbursement questions

The Internal Revenue Service guidelines can change without warning, and can be difficult to navigate under the best of circumstances. Questions of HSA eligibility may be directed to a healthcare provider explaining the needs of a specific medical condition, or to a tax advisor who may have the most current information. Understanding exactly what is qualified and what is not will ensure that you have sufficient funds to cover your services. 

Can an HSA be used for family mental health care? 

You may wonder whether therapy coverage extends to counseling for or with other family members. Generally, it is, as long as the therapy is used to manage mental health conditions. A diagnosed mental health condition, such as depression in a child or spouse, will typically be covered, but a service like family or marriage counseling is not usually eligible.

Additional resources and support

If you’re considering using an HSA for therapy, you might be looking for more resources and support. Numerous options and organizations are available if you’re seeking mental health treatment covered under your HSA plan or other affordable treatment options. 

For instance, BetterHelp offers affordable pricing options that may be comparable to the copays of many insurance plans. This platform can connect clients with online therapists who suit their needs and circumstances, and it can provide a way for people to receive therapy in a flexible, comfortable way from their own homes.

In some cases, you may be able to use HSA funds to pay for online therapy services, as long as the therapy is deemed medically necessary. Consider reaching out to your HSA administrator or the online therapy platform for information on proving medical necessity and whether the therapy might be eligible for reimbursement.

Research indicates that online therapy often results in similar outcomes as in-person therapy for common mental disorders such as depression and anxiety, for instance. Online therapy may also have several advantages over traditional therapy, including increased convenience for patients and cost-effectiveness.