Given the many perks and benefits offered by the Health Savings Account program, not only more and more people look forward to availing such program but more importantly, more and more people would like to take advantage of the seemingly easy tax-free money that you can get out of HSA. Some people wonder whether they can right away withdraw the money that they have been saving from this program and if the answer is in the negative, what are the qualifications that would make one be entitled to take the money out of the said savings account either for health related purposes or for personal reasons.
This basic information will allow you to know more before you intend to do so.
Can you withdraw from your Health Savings Account?
Based on the premise that the said account is yours and yours alone and not that from your employer, surely you can absolutely withdraw from it. Actually, you can withdraw from the account on account of medical related purposes or for even non-medical related purposes
You can think of it this way: You may consider it as a form of taking money out of your any typical retirement fund account prior to even reaching the age of retirement where you should have been deemed qualified.
However, take note though that should you withdraw and take out money out of the Health Savings Account prior to having reached the age of retirement- whether it is for medical reasons or not, there is a corresponding Health Savings Account penalty which involves the payment of your income tax based on your contributions. In addition, you also have to pay 20% tax depending on the total amounts that you have withdrawn.
But of course, there is an exception to the payment of penalty. Once you have reached the age of 65 years old or even older, then it is deemed to be the best time for you to use the money out of the HSA and spend it whether it is related to medical expenses or not and there is no need for you to pay a 20% penalty. That is the good thing about waiting until you reach the retirement age. However though, you still have to pay for the income tax that you will be incurring on every withdrawal that you will be making which is particularly not related for medical expenses exclusively qualified under the Health Savings Account Program.