Short answer: Yes. After age 65, you can use HSA funds for non-medical expenses without the 20% penalty, but those withdrawals are still subject to income tax.
Once you reach age 65, the rules for Health Savings Account distributions become more flexible. You may withdraw HSA funds for any purpose, not just qualified medical expenses.
If you use HSA funds for qualified medical expenses after age 65, the withdrawal remains completely tax-free. This includes medical, dental, vision, and other IRS-qualified healthcare costs.
If you use HSA funds for non-medical expenses after age 65, the withdrawal is treated as taxable income, similar to a distribution from a traditional IRA. However, the 20% additional penalty that normally applies to non-qualified HSA withdrawals no longer applies.
Because of this flexibility, some people use their HSA as part of their retirement strategy, preserving the account for later years when healthcare costs typically increase or when additional taxable income may be needed.
Sources
- IRS, Publication 969 – Health Savings Accounts: https://www.irs.gov/forms-pubs/about-publication-969
- IRS, FAQs on Health Savings Accounts – Distributions: https://www.irs.gov/faqs/health-savings-accounts-hsas
Content history
Originally published: March 27, 2025
Last reviewed: January 26, 2026