No — Long Term Disability Insurance is not HSA eligible
Long term disability insurance is not eligible for reimbursement with a flexible spending account (FSA), health savings account (HSA), health reimbursement arrangement (HRA), limited-purpose flexible spending account (LPFSA) or a dependent care flexible spending account (DCFSA). Using HSA funds for Long Term Disability Insurance would be a non-qualified distribution subject to income tax, plus a 20% penalty if you are under 65.
Paying with HSA funds results in income tax on the amount and a 20% penalty if you’re under age 65. Keep Long Term Disability Insurance off your HSA unless circumstances change.
How to claim it
- Pay with a regular card, not your HSA debit card.
- If a physician prescribes it for a diagnosed condition, some otherwise-ineligible items may qualify with a Letter of Medical Necessity — ask your provider.
Frequently asked questions
Can I use my HSA debit card to pay for Long Term Disability Insurance?
No. Long Term Disability Insurance is not a qualified medical expense. Using your HSA card would be a non-qualified distribution subject to income tax and a 20% penalty if you are under 65.
Do I need to keep a receipt for Long Term Disability Insurance?
Yes — for every HSA withdrawal the IRS requires documentation proving the expense was qualified. Keep itemized receipts for at least 3 years after the tax year.
Can I reimburse myself years later for Long Term Disability Insurance?
Yes — the IRS imposes no time limit on HSA reimbursements. As long as the expense was incurred after your HSA was established and you have documentation, you can reimburse yourself years or even decades later.