Direct answer
Yes, if you use HSA funds for non-qualified expenses, the amount is subject to income tax and an additional 20% tax penalty unless you are over age 65 or disabled.
Treasury Department guidelines on tax-advantaged health savings vehicles. For additional information about the tax implications of HSA distributions, see the Internal Revenue Service’s guide on Health Savings Accounts and Other Tax-Favored Health Plans.
What this means for you
Yes, if you use HSA funds for non-qualified expenses, the amount is subject to income tax and an additional 20% tax penalty unless you are over age 65 or disabled.
FARMER STOCKMAN
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