Yes, therapy is eligible
Mental health counseling and psychotherapy with a licensed provider are eligible expenses under HSA and FSA rules. This includes:
- Individual psychotherapy for any mental health concern
- Couples therapy (when at least one partner has a diagnosable condition being treated; some plans are more flexible than others)
- Family therapy when a member has a diagnosable condition
- Child and adolescent therapy
- Telehealth therapy sessions
- Sessions with licensed providers: LMHCs, LCSWs, psychologists (PhD, PsyD), psychiatrists (MD)
What is generally not eligible:
- Coaching that is not clinical therapy
- Wellness or general life-improvement work
- Therapy with unlicensed providers (with rare exceptions)
- Some kinds of marriage enrichment programs that are not technically therapy
When in doubt, the IRS guidance (Publication 502) and your HSA/FSA administrator are the authoritative sources. For most therapy sessions at a licensed group practice, you are well within the eligible territory.
How HSA and FSA differ
A quick refresher:
- HSA (Health Savings Account): for people with high-deductible health plans. Funds roll over year to year and stay with you if you change jobs. You can pay for eligible expenses with HSA funds at any time, including reimbursing yourself for expenses you paid out of pocket months or years ago, as long as the expense was incurred while the HSA was active.
- FSA (Flexible Spending Account): for people with most employer health plans. Funds typically must be used in the plan year (use-it-or-lose-it, with some employers offering limited carryover or grace periods). Funds usually do not follow you if you change jobs.
The eligibility rules for therapy are essentially the same for both.
How to pay for therapy with HSA/FSA in practice
There are typically two ways:
Option 1: HSA/FSA debit card at the practice
Most HSA and FSA accounts come with a debit card. If your therapy practice accepts cards (we do at Aurora Counseling Associates), you can use the HSA/FSA card directly to pay for your session, copay, or full session fee if you are self-pay.
This is the simplest method. The expense is paid directly from your pre-tax account. Keep the session receipt for your records in case your administrator audits it later.
Option 2: Pay out of pocket, reimburse yourself
You can pay for therapy with a regular credit card or your own funds, then submit the receipt to your HSA or FSA administrator for reimbursement. This is useful if:
- The practice does not accept HSA/FSA cards directly
- You want to keep your HSA growing tax-free for longer (HSA only)
- You want to maximize credit card rewards
For HSAs specifically, you can also defer reimbursement: pay out of pocket now, hold the receipts, and reimburse yourself years later (the IRS does not put a time limit on HSA reimbursement as long as the expense was incurred while the HSA was active).
What to keep for records
For any therapy session paid with HSA or FSA funds, keep:
- The session receipt from the practice (we provide these on request)
- The session date
- The amount paid
- The name and license of the provider
If your HSA/FSA administrator ever audits you, this is what they will ask for. Most will not audit, but the IRS can.
Common gotchas
A few things that trip people up:
Couples therapy and insurance billing
If you are using insurance for couples therapy, the session is usually billed under one partner's name with a clinical diagnosis. If you are using HSA/FSA for couples therapy and not using insurance, you can still use the HSA/FSA, but the documentation matters. Ask the practice how to handle this.
"Wellness" sessions
Some HSA/FSA administrators flag sessions that look like life coaching or general wellness work rather than treatment of a diagnosable condition. Therapy with a licensed clinician for a presenting clinical concern is fine; if your provider is not licensed or the work is not clinical, eligibility gets murkier.
Spouse and dependent therapy
You can use your HSA or FSA for the therapy of your spouse and dependents, not just yourself. This is often missed. If your child is in therapy, your child is eligible. If your spouse is in therapy, your spouse is eligible.
Telehealth eligibility
Telehealth therapy is eligible the same as in-person therapy. The COVID-era rules made this clear; the eligibility persists.
Out-of-network and superbills
If your therapist is out of network with your insurance and you submit a superbill for partial reimbursement, you can still use HSA/FSA for the remaining out-of-pocket portion. You cannot double-dip (use HSA/FSA for the same amount your insurance reimbursed).
FSA timing
If you have an FSA with a use-it-or-lose-it deadline at the end of the plan year, the end of the year is a good time to look at your remaining balance. Therapy is one of the most useful ways to spend down an FSA, since you can often pre-pay for upcoming sessions or schedule additional sessions in the remaining weeks.
What about high-deductible plans?
If you have an HDHP, therapy will likely come out of pocket (and then count toward your deductible) until you hit the deductible amount. Once you hit it, your insurance starts paying its share. Until then, your therapy costs essentially come from your wallet, often funded through your HSA.
This is one of the reasons HSAs exist alongside high-deductible plans. The HSA softens the blow of paying full freight for healthcare until the deductible is met.
What Aurora Counseling Associates accepts
We accept HSA and FSA debit cards directly. We accept Blue Cross Blue Shield, Tufts Health Plan (HMO/PPO/GIC), Tufts Health Direct, Harvard Pilgrim, Point32Health, Optum, United Behavioral Health, Mass General Brigham Health Plan, and Health Plans Inc. Some clinicians also accept Aetna and United Healthcare. We provide superbills for out-of-network reimbursement.
Self-pay rates are $200 to $250 per session.
For specific questions about how to use your HSA or FSA for therapy at our practice, call us at (508) 650-0991 and we will help you figure it out.
A final note
The IRS rules around HSA and FSA spending change occasionally, and individual employer plans sometimes add their own constraints. For any unusual situation, your HSA or FSA administrator is the authoritative source, not us (or any other practice). When in doubt, ask them.
Therapy is one of the more legitimately eligible expenses you can spend pre-tax dollars on. If you have an HSA or FSA and have been hesitating about whether to start therapy because of the cost, the pre-tax savings often makes the math much more workable than people realize.