HSA Therapy Reimbursement: Using Your HSA For Mental Health Care

If you're wondering whether you can use your Health Savings Account (HSA) to pay for therapy, the answer is often yes. When therapy is received as medical treatment for a diagnosed mental health condition, it can qualify as an HSA-eligible expense. This means you may be able to use tax-free dollars to cover the cost of mental health counseling, potentially making care more affordable. BetterHelp accepts HSA/FSA cards, and eligible therapy expenses may qualify under many HSA/FSA plans.

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 support mental health. Below, explore how HSA eligibility works, how to use your HSA for therapy payments, and what mental health services may qualify for reimbursement.

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-deductible and may be useful for people who have a high-deductible health 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."

Tax advantages of using an HSA for therapy

One of the most significant benefits of using an HSA for therapy is the triple tax advantage. Contributions to your HSA are made with pre-tax dollars, the money can grow tax-free, and withdrawals for qualified medical expenses are also tax-free. This means that if you're in the 22% tax bracket, using HSA funds for a $150 therapy session effectively saves you about $33 compared to paying with after-tax income. Over the course of regular therapy sessions, these savings can add up considerably, making mental health care more accessible.

What mental health services are HSA-eligible?

Mental health therapy, when deemed therapy received as medical treatment, can be an HSA-qualified medical expense. This allows 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 or management of a specific medical condition. Other services, such as mediation with family members or stress reduction programs, may not be covered.

HSA-eligible mental health services may include:

• Individual therapy with a licensed mental health professional
• Psychiatric care and medication management
• Mental health medications prescribed by a licensed healthcare provider, when clinically appropriate
• Psychological testing and assessments
• Some complementary therapies (e.g., acupuncture) when medically necessary

Mental health therapy and counseling

The Internal Revenue Service allows for tax-free spending on a number of medical and mental health treatments, which is why using an HSA or FSA for therapy can be highly beneficial. 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. For the expense to qualify, your therapist must be licensed, which includes licensed psychologists, LCSWs, licensed counselors, and LMFTs.

Psychiatric care and medication management

If you have a severe mental health condition, you might benefit from seeing a psychiatrist or another licensed psychiatric provider for an evaluation, medication management when clinically appropriate, and ongoing support. Psychiatric care can also be an HSA-eligible expense, which may help you manage how much a psychiatrist costs and make it easier to access professional support if needed. Additionally, mental health medications that are prescribed by a licensed healthcare provider for a diagnosed condition may also qualify as HSA-eligible expenses when clinically appropriate.

*Medication is prescribed only when clinically appropriate and is not guaranteed. Pricing, availability, insurance coverage, and copays vary by plan, location, and provider availability are not guaranteed.

Complementary and alternative therapies

Sometimes, alternative treatments such as acupuncture or green light therapy 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. Keep in mind that complementary therapies typically require documentation showing medical necessity to qualify for HSA coverage.

When a Letter of Medical Necessity may be required

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. It's important to obtain one if you have a diagnosed mental health condition, as it can help demonstrate that the therapy was needed for medical purposes and support your reimbursement claim.

How to use your HSA for therapy payments

There are two primary ways to use your HSA funds for therapy: paying directly at the time of service or reimbursing yourself for expenses you've already paid out of pocket. Understanding both methods can help you choose the approach that works best for your situation.

Paying directly with an HSA debit card

Many HSA accounts come with a debit card that you can use to pay for qualified medical expenses directly. When you attend a therapy session, you can simply swipe your HSA debit card to pay your healthcare provider, just as you would with any other debit or credit card. This method is often the most convenient because it eliminates the need to submit reimbursement paperwork later. Before your appointment, it can be helpful to confirm with your mental health care provider that they accept HSA card payments.

HSA therapy reimbursement process

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. Here are some tips to keep in mind for how to get an HSA therapy reimbursement:

1. 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, if you have a diagnosed mental health condition.

2. 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.

3. Keep track of your HSA reimbursements and make sure you don't go over the yearly contribution limit. Even though you don't need to send the LMN with your reimbursement form, it could be important to keep it for tax purposes.

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

What mental health expenses are not HSA-eligible?

Understanding which expenses don't qualify for HSA coverage could be just as important as knowing what does. Using HSA funds for non-qualified expenses can result in income tax on the amount plus a 20% penalty if you're under 65. After age 65, the penalty is waived, but taxes still apply.

Services that typically don't qualify

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

• Marriage or family counseling that is not deemed medically necessary (for example, sessions aimed solely at helping partners define the relationship)
• Life coaching or personal development programs
• Health club dues or fitness programs that are not related to a specific injury or medical issue
• Personal care that is not related to physical health, including manicures, pedicures, or non-prescribed massages
• Elective cosmetic procedures
• Non-prescribed supplements or natural sleep aids

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

How to verify eligibility before treatment

To determine what would be considered qualified medical expenses under your HSA, you can use several resources. IRS Publication 502 gives a detailed list of medical expenses that can be covered by an HSA, including costs for diagnosing, treating, or preventing medical and mental health problems. You can also consult your HSA provider's website, which often has information and lists of expenses that are HSA-eligible. If you still have questions, you can ask your insurance provider, your employer's human resources (HR) department, or a tax professional.

HSA vs. FSA for therapy costs

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 that may affect which option works better for your therapy needs:

Can I use my 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.

BetterHelp now offers psychiatry services through Uplift as an additional care option alongside therapy. Some providers on BetterHelp may be in-network with certain health plans in select states, including Arkansas, Colorado, Connecticut, New Jersey, Florida, Illinois, Indiana, Kentucky, Maryland, Michigan, Ohio, Nevada, Missouri, Montana, North Carolina, New York, Oklahoma, Pennsylvania, Texas, Virginia, and Washington, DC. Check your in-network status on the BetterHelp site. Coverage varies by plan, provider, therapist availability, and, for psychiatry services, provider availability through Uplift.

When sessions are covered, members typically pay an average copay of about $23 per session for therapy. Psychiatry services through Uplift may also be covered by insurance for eligible members, and costs can vary by plan, provider, and service type. Medication availability and coverage may vary by member location, clinical appropriateness, and individual pharmacy/insurance benefits. Prescribing decisions are made by the treating clinicians. We do not guarantee that any specific medication will be prescribed or covered by a member's insurance plan.

Using your HSA for family members' mental health care

You may wonder whether therapy coverage extends to counseling for or with other family members. In many cases, it does, 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, may typically be covered. You may be able to use HSA funds to pay for therapy for your spouse and tax dependents, with the same eligibility rules applying. However, services like family or marriage counseling may not be eligible unless they're deemed medically necessary by a healthcare provider.

Benefits of online therapy

Online therapy can offer several advantages that may help your HSA funds stretch further—BetterHelp online therapy costs around $70-100 per week, while in-person sessions typically cost around $100-350 per session. Because working with a licensed therapist online is often more affordable than traditional in-person sessions, you may be able to attend more sessions within your budget. Additionally, the convenience of attending therapy from home eliminates transportation costs and time away from work. BetterHelp accepts HSA/FSA cards and connects clients with licensed therapists from a network of over 30,000 qualified providers worldwide, providing a flexible, comfortable way to receive care.

How effective can online therapy be?

A study by Moghimi et al. (2021) in JMIR Mental Health suggests that online cognitive behavioral therapy can be beneficial for individuals experiencing symptoms of anxiety and depression. These results coincide with BetterHelp's platform outcomes report, where 72% of BetterHelp users experienced a reduction in symptoms in 12 weeks. For people considering HSA therapy reimbursement, these findings suggest that online therapy may be a practical option to explore alongside in-person care.