What Happens if I Use my HSA for Other Purposes?
Accidentally using your Health Savings Account (HSA) to pay for something other than a qualified medical expense is correctable. You can repay the incorrect distribution before filing your federal taxes for that tax year. However, if you do not correct the mistake, the unqualified amount will be subject to income tax, and you may also face an additional 20% tax penalty. To avoid these potential tax implications it's important to monitor your HSA usage carefully.
