HSA Frequently Asked Questions (FAQ)

E. Using Health Savings Account Funds

1. Am I required to track the expenditures made from my HSA?

Yes, the individual who establishes the HSA is required to maintain a record of the expenses sufficient to demonstrate that the distributions were for qualified health expenses.

2. Who will determine whether something is a "qualified health expense"?

The IRS will make this determination based on disbursements reported on your annual tax return. You do not submit records with your IRS return, but it is your responsibility to maintain records for all of your expenses in the event the IRS requests them. Specifically, the IRS requires that you must be able to show that:

  • The distributions were exclusively to pay or reimburse qualified health expenses,
  • The qualified health expenses had not been previously paid or reimbursed from another source, and
  • The health expenses had not been taken as an itemized deduction in any year.

After you open an HSA, you can use funds to pay for covered expenses that apply toward the HDHP annual deductible and coinsurance costs (e.g. medical services, prescriptions, mental health services, etc). You can also pay for qualified health expenses that your health plan might not cover, such as vision care (eyeglasses and contact lenses), dental and orthodontic services. Qualified health expenses also include long-term care premiums, Medicare premiums, Medicare copays, and COBRA premiums. Detailed information about qualified health expenses can be found in Section 213(d) of the Internal Revenue Code and IRS Publication 502. A Summary of the HSA Eligible Expense List is also available.

3. When can I use my Health Savings Account funds?

You can use your funds as soon as they are deposited in the account. Remember this is different from the TSB plan, where the entire pledge is available on January 1. Health Savings Account funds only become available for use after they are deposited. 

Funds in the HSA can only be used for expenses incurred from the date of the establishment of the HSA account. For newly enrolled employees, that would be the date the HSA account opened. For employees that transferred their HSA balances directly from another HSA account over to Nyhart, the HSA will be considered established as of the original date that the transferred HSA account was opened.

Contact Nyhart at 800-284-8412 or at to learn how to transfer any existing HSA to your Nyhart HSA.

4. How can I access my Health Savings Account funds?

Once contributions are made to your account, you can access your funds in several different ways:

  • Use the IU Benefit Card at healthcare provider locations*. The IU Benefit Card is a debit-type Visa card that can be used to pay for your eligible expenses at the time of service at any healthcare provider, such as doctors’ offices, pharmacies, hospitals, labs, vision care providers, dental offices, chiropractor’s offices, etc.
    • Pay immediately by swiping your card at your provider’s office
    • Write the card number on the provider’s bill and return to your provider
  • Make an HSA Distribution online. Log in to your account at iu.nyhart.com and select the Make an HSA Transaction button on the Welcome page.
    • Send yourself one-time or repeating checks to reimburse yourself for healthcare bills that you pay out of pocket (a $10 fee is charged for each check distribution sent to yourself)
    • Send a payment to a provider directly from your account ( no fees for payments made to providers)
    • Transfer funds directly from your HSA to a personal bank account (no fees apply).

* Special rules apply to the use of the IU Benefit Card when enrolled in both the HSA and the Healthcare Flexible Spending A ccount (FSA).

5. Can I use my account funds for services I received before I enrolled in the HSA?

No. You can only use your savings for expenses incurred after your HSA is established. If you transferred your HSA balance from another HSA account over to Nyhart, your account is considered to have been established as of the date the prior account was established. Which means that you can use the funds in your HSA for any expense that you incurred since the original date that your transferred HSA was established.

6. Is there a time restriction on when I may use the funds in the account?

No, you may reimburse yourself for an expense with future contributions or past contributions and there is no time limit on this. The only restriction is that the service must have occurred after the HSA account was opened (and you were enrolled in the HDHP plan).

7. I understand that I can reimburse myself from my HSA for qualified health expenses that I pay out-of-pocket but is there a time limit? Do I need to reimburse myself in the same year?

You have your entire lifetime to reimburse yourself. As long as you had your HSA established at the time the expense was incurred, you saved the receipt, and it was not otherwise reimbursed, you can reimburse yourself for the expense from your HSA even years later.

8. Is there a minimum reimbursement amount I can request from my Health Savings Account fund?


9. Is there a maximum amount I can use or withdraw from my account?

You can only withdraw an amount equal to the balance in your account. Check your balance online prior to withdrawing funds to avoid Insufficient Funds fees or denial of the charge.

10. Can I use my Health Savings Account to pay for medical services provided in other countries?

Yes. The IU Benefit card can be used at any healthcare provider, anywhere Visa is accepted.

You are responsible to verify that the expense is considered a qualified medical expense under Section 213(d) of the Internal Revenue Code and IRS Publication 502.

11. Can I use the money in my HSA to pay for health care for a family member?

Yes, you may withdraw funds to pay for the qualified health expenses of you, your spouse* or an IRS-qualified tax dependent without tax penalty. This is true even if they are not covered on your HDHP plan.

* A spouse means one by marriage, either opposite-sex or same-sex, legally entered into in one of the 50 states, the District of Columbia, or a U.S. territory or a foreign country. Spouses qualify for preferential federal tax treatment of health care benefits.

** Please note that the healthcare reform law has made it possible for parents to keep children up to age 26 on their health plans if they have no other coverage – even those who are married and living away from home. However, HSA funds can only be spent on family members who qualify as tax dependents as defined by IRS tax rules. In order to be treated as a qualifying child, an individual must not have attained the age of 19 years old, or 24 if a student, before the close of the tax year.

See the IRS rules for “A Qualifying Child”.

12. If my child is disabled does that affect their status as a qualifying child?

Yes. The age requirement (i.e., that the qualifying child be less than 19 years old, or 24 if a student) does not apply if the child is permanently and totally disabled.  If an individual experiences the permanent and total disability at any time during the calendar year, he or she will not be required to satisfy the age requirement.

13. If my child turns age 19 (or 24 if a student) during the year, can I still use my HSA funds for their expenses?

No.  IRS rules require that the child not attain the specified age (age 19 or 24 if a student) as of the close of the tax year. The child attains their specific age on the anniversary of the date the child was born. 

14. What if my health expenses are more than my Health Savings Account balance?

You will have to pay, out-of-pocket, the difference between your expenses and your Health Savings Account balance. Check your balance online prior to withdrawing funds to avoid Insufficient Funds fees.   As additional funds are deposited into your HSA account you can then reimburse yourself for those prior expenses.

15. What happens if I cancel my high deductible health plan (HDHP)?

When your HDHP coverage ends, you are no longer eligible to make Health Savings Account contributions. However, the money in your HSA is yours until you spend it*.  As a result, you may keep your HSA with Nyhart and continue to use the funds to pay for qualified expenses. When you are no longer an active employee on the IU HSA plan, you will then be responsible for the HSA account maintenance fees (see HSA Fee Schedule).

If you are eligible again, i.e., enrolled in a HDHP, you may make additional contributions to your HSA.  Please remember that you are responsible for tracking your personal contribution limit (including coordination of contributions should your spouse also contribute to an HSA) and contact your tax advisor if you have additional questions about your specific situation.

*Note, if you term your HDHP coverage during a tax year, your maximum contribution for that year is prorated based on the number of months that you were enrolled in an HDHP plan.  

16. What are my options if I withdraw my money from my Health Savings Account in error?

You can return the money to the account if there is clear and convincing evidence that the withdrawal was a mistake. You can contact Nyhart and request a Return of Mistaken Distribution form. This money must be repaid by April 15th of the year following the error.

17. I have an HSA but no longer have HDHP coverage. Can I still use the money that is already in the HSA for health expenses tax-free?

Once funds are deposited into the HSA, the account can be used to pay for qualified health expenses incurred after the account was opened. These expenditures are tax-free, even if you no longer have HDHP coverage. The funds in your account roll over automatically each year and remain indefinitely until used. There is no time limit on using the funds except that you cannot use the funds for expenses incurred before the HSA was opened.

18. What happens to the money in the Health Savings Account fund after I turn age 65?

You can continue to use your account tax-free for out-of-pocket health expenses. When you enroll in Medicare, you can use your account to pay Medicare premiums, deductibles, copays, and coinsurance under any part of Medicare.

Once you turn age 65 you can also use your account to pay for things other than qualified health expenses. If used for other expenses, the amount withdrawn will be taxable as income but will not be subject to any other penalties. Individuals under age 65 who use their accounts for non-health expenses must pay income tax and a 20% penalty on the amount withdrawn.

19. Can I borrow against the money in my HSA?

No. You may not borrow against it or pledge the funds in it. For more information on prohibited activities, see Section 4975 of the Internal Revenue Code.

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