How to Use an HSA to Pay Medical Bills

If you have a Health Savings Account but not enough money to cover your medical expenses, you are not necessarily doomed to insurmountable debt — even if you owe on old medical bills.

Alexandra Wilson, a Certified Financial Planner in Atlanta, used her HSA contributions to cover medical bills from when she gave birth to her daughter the previous year.

She front-loaded her HSA in anticipation of her daughter’s arrival. But as so many new parents discover, Wilson ended up making additional visits to her pediatrician post-delivery.

Instead of racking up debt or digging into her regular savings, she increased her HSA contributions and used that money to pay off the bills.

“You’re saving money because you’re not having to pay taxes on that money,” Wilson said.

Want to know how you can start paying down old medical debt with your HSA? Read on.

How to Use an HSA to Pay Off Medical Debt

Money that you put into an HSA is yours to keep — unlike a Flexible Spending Accountwhich has a use-it-or-lose-it annual requirement.

If you (or your employer) have contributed to your HSA, you may have some savings built up. Here’s how to know if you can use that money to pay off old medical debt.

If You Currently Have an HSA

Using your HSA to pay off old medical debt is dependent upon the answer to one question: Did you incur the debt before you set up your HSA?

If the answer is “yes,” you cannot use the HSA.

If the answer was “no,” you can.

Let’s say you’ve been contributing $100 a month to your HSA for one year. You have $1,200 in the account when you break your arm and go to the emergency room.

You end up getting a bill for $2,000, which is $800 more than you have in your account. Don’t panic.

You can use the $1,200 you’ve already saved to pay part of…