Finding Support Through Insurance
If you have medical insurance, you can use your HSA funds for any qualified expense that’s not paid directly to the provider or for which you’re not reimbursed by your insurance company. This includes co-pays and expenses to meet your deductible, as well as any uncovered medical expense.
Your HSA account might not be the first thing you think of when it comes to financing your mental health care. Yet this type of account allows you to reduce your tax liability and pay for your mental health care expenses, using pre-tax funds. For many people, it’s a win-win.
“If you have opened a HSA to help cover future costs of healthcare needs, learning how to apply it towards mental health therapy could pay itself in dividends! Check with your employer to see if they’ll contribute or match funds to your HSA as well.”
Talkspace therapist Ashley Ertel, LCSW, BCD, C-DBT
If you don’t already have an HSA account, check with your employer and see if they offer a program as part of your benefits package. If not, or if you’re self-employed or unemployed, there are many companies that offer independent HSA plans. Make sure to familiarize yourself with the current IRS rules regarding these accounts.
To qualify for an HSA, you must have a high-deductible health insurance plan. In addition, there’s a limit to how much you can contribute each year. You get to add a “catch up” bonus contribution once you reach age 55, and you can’t contribute to the account once you start receiving Medicare benefits at age 65. (However, you can still use funds in your account indefinitely).
It’s important to find a good therapist and start treatment for any mental health condition as early as possible. If you’re concerned about how you’re going to pay for any of your mental health treatments, tapping into a health savings account can be a great option, especially if you’ve been contributing to the account for several years. Why not use tax-free funds to pay for your mental health care?
For more information on HSA accounts and to learn how you can use them for mental health care services, see:
Looking for online therapy that takes insurance? Get connected at Talkspace and check your eligibility today.
Mental health care is crucial to maintaining overall wellness. Perhaps now more than ever, it’s important to remember that your emotional and mental health are just as important as your physical health.
According to the Substance Abuse and Mental Health Services Administration (SAMHSA) survey on mental health, 47.6 million adults in the United States live with a mental illness, or nearly one in five people over age 18. As many as 30% of those who have a mental health condition don’t seek treatment, and a common obstacle to mental health care is the cost.
The good news is that you can pay for many mental health treatments and services (including some forms of online therapy) with your flexible spending account (FSA) or your health savings account (HSA), to offset out-of-pocket expenses.
In this post, we’ll go into more detail about what mental health services and products qualify for coverage with FSA and HSA funds.
May is Mental Health Awareness Month. Traditionally, this occasion has been used to reduce stigma around mental health struggles and promote helpful resources. Now, more than ever, this message matters.
The COVID-19 pandemic has had a significant impact on mental health. Physical health challenges and social distancing have been difficult for people of all ages. Many are now looking for care and support, often either for the first time or after many years.
While it may not be obvious, the Health Savings Account (HSA) can play a vital role in that process. With its unique tax advantages1 and ease of use, the HSA is a great companion to your other mental health resources.
To mark Mental Health Awareness month, we at HealthEquity are sharing five ways you can use your HSA to promote healing and positive mental health outcomes.
Here they are.
1. Your therapy bills may be hsa-eligible
If you see a therapist or receive mental health counseling, you may be able to pay the bill with your HSA funds.
To qualify, the IRS requires your therapy or counseling to be directly related to a diagnosed medical condition – rather than for the general improvement of mental health or stress. That means that, generally, talk therapy or behavioral counseling with a letter of medical necessity may be a qualified medical expense while something like marriage counseling or life coaching may not. Be sure to speak with your healthcare provider to learn exactly whether your expense is qualified.
If an expense is qualified, you can pay for your sessions with your HSA. Whether you pay directly with an HSA debit card or receive reimbursement from your account, your payments will come straight from your tax-free funds.
2. You can use hsa funds towards psychiatric care
Psychiatric care is also an HSA-qualified medical expense. You could pay directly with an HSA debit card or be reimbursed for services like:
- Office visits with your psychiatrist
- Psychiatric hospitalization
- Lodging and meal costs if you must travel for psychiatric care
Keep in mind that amounts that go toward your co-pay or deductible are also HSA-qualified expenses. Again, the advantage of paying with your HSA is that you’ll be using pre-tax funds to satisfy your bills.
3. You can pay for medication with your hsa
You can use your HSA to pay for medication, including prescriptions from your psychiatrist or general practitioner to manage mental health conditions like anxiety or depression.
You can also support your mental health through HSA-qualified expenses like sleep-deprivation treatments. According to the Sleep Foundation, getting the requisite amount of sleep improves emotional and mental health while lack of sleep can increase the risk of suicidal thoughts or ideation.
Alternative mental health treatments, like acupuncture, may also payable or reimbursable with an HSA.
4. Your fitness program or health club dues may be hsa-eligible
Exercise is another key aspect of mental health. According to the Mayo Clinic, exercise has been shown to alleviate some of the major symptoms of depression and anxiety by providing achievable goals and feel-good endorphins.
Regular exercise can also boost confidence and provider greater social interaction – though be sure eliminate COVID-19 related risks first.
You may be able to use HSA funds to help advance your fitness goals. If your health club dues or fitness programs are a treatment for a specific medical condition diagnosed by a healthcare professional, they could qualify as an HSA-qualified expense with a letter of medical necessity.
Check with your healthcare provider for more details.
5. You can build tax-free savings to ease financial worries
One of the less direct but most significant ways your HSA can support your mental health is by helping you grow your savings.
According to a 2021 CreditWise survey from Capital One, finances are the number one source of stress for Americans. More than 70 percent ranked personal finances as their number one source of stress, outstripping politics (59 percent), work (49 percent) and family (46 percent).
Medical expenses play a large role in financial stress – one that can be alleviated by building more savings. HSAs are an excellent way to save because they feature a triple tax advantage: contributions are tax-deductible, distributions are made tax-free and interest is earned tax-free.
And those with HSA funds are more confident about their savings. According to a fall 2020 survey from HealthEquity, just 48 percent of respondents said they had a good idea of how much money they’d need to cover costs in retirement. But those with an HSA were more confident – 63 percent of respondents said they have a good idea of how much money they’d need to cover costs in retirement.
Conclusion
HSAs may not immediately come to mind when you think about strategies to improve mental health. But they can be a powerful resource.
By providing good savings results and a tax-advantaged way to spend on healthcare, HSAs can do a lot to promote positive mental health. This Mental Health Awareness Month, take some time to see what your HSA can do for you.
Need help? Check out the Qualified Medical Expense tool from HealthEquity for ideas on how to use your HSA funds, or reach out to us directly.
1 HSAs are never taxed at a federal income tax level when used appropriately for qualified medical expenses. Also, most states recognize HSA funds as tax-deductible with very few exceptions. Please consult a tax advisor regarding your state’s specific rules.
HealthEquity does not provide legal, tax or financial advice. Always consult a professional when making life-changing decisions.
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 medications
5
- 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.
