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.
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.