What happens if I accidentally use my HSA card for non-medical expenses?
Using a Health Savings Account debit card for ineligible, non-medical purchases results in an infraction under IRS regulations governing tax-advantaged accounts. If discovered during an audit or tax review, the withdrawn amount must be added back to your gross income and is subject to standard income taxes. Furthermore, if you are under the age of 65, the IRS imposes an additional 20 percent penalty tax on the misspent distribution amount. To correct an accidental misuse before tax filing, account holders can often deposit equivalent personal funds back into the HSA and properly document the correction, though correcting errors promptly with the account administrator prevents long-term compliance complications.
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