5 min read
Your Full Guide to Paying for Therapy With HSA or FSA
Author
Melissa Pizor
COC, CPC, CPCO, CPMA, CPRC
Even with insurance, therapy can have out-of-pocket costs that can make it more difficult to afford. You can use HSA and FSA accounts to help offset these costs, including any copays, deductibles, and coinsurance. Many people don’t realize this, meaning that they’re missing out on the full benefits of these accounts.
In this article, we’ll go over what HSA and FSA accounts are, the types of therapy services they cover, and how to start paying for therapy with HSA and FSA.
Understanding HSA and FSA Accounts
The main difference when comparing HSA vs. FSA therapy coverage is the length of time you have to use your benefits.
What is an HSA (Health Savings Account)?
An HSA is a tax-advantaged account for eligible medical costs. It lets people save pre-tax money for health expenses not covered by insurance. It is usually associated with high-deductible health plans. A major difference between HSA and FSA accounts is that HSA accounts roll over each year, allowing funds to grow.
An HSA has three tax benefits. First, contributions are tax-deductible. Second, funds grow tax-free. Lastly, withdrawals for qualified medical expenses are not taxed. Many people wonder, “Can I use HSA for therapy?” The answer is that HSAs can help to provide significant savings on health care, including therapy.
What is an FSA (Flexible Spending Account)?
An FSA is an employee-sponsored account that has pre-tax funds for health expenses. This means that your employer takes money out of your paycheck and deposits it into this account. Some employers will also contribute to FSAs.
Unlike HSAs, funds don’t roll over in an FSA account. This means that funds expire at the end of the year, and if you don’t use them up before this deadline, you lose them.
Why These Accounts Are Valuable for Mental Health Care
Paying with pretax dollars helps to reduce overall costs, often up to 20-30%, depending on your tax bracket. They can also give you more flexibility in how you pay for mental health care. In addition to therapy and counseling fees, HSAs and FSAs can help cover the costs of:
- Copays, coinsurance, and deductibles
- Transportation to therapy
- Psychiatric care
- Some digital CBT and meditation apps
- Prescription medications
- Substance abuse treatment
- Diagnostic assessments
Is Therapy Eligible for HSA or FSA payments?
Both HSA and FSA are pre-tax therapy payment options to consider.
Therapy as a Qualified Medical Expense
According to the IRS guidelines, mental health treatment is eligible as a qualified medical expense, which includes psychotherapy and mental health counseling. Online therapy and message-based counseling are also eligible. Treatment must come from a provider licensed in your state. This includes licensed therapists, psychologists, and clinical social workers.
What Types of Therapy are Covered
In order for therapy to be covered, it must be provided for a medical or mental health purpose. Most mental health conditions are covered, including anxiety, depression, stress, PTSD, bipolar disorder, and OCD. Individual or group therapy that uses an evidence-based approach, such as cognitive-behavioral therapy (CBT) or humanistic, is covered. Marriage and family counseling may also be covered if there is a clear medical or mental health need.
What's Not Typically Covered
HSA and FSA accounts cover only medical services. So, life coaching, self-help services, personal development, and wellness retreats aren’t included.
How to Use Your HSA or FSA for Therapy
In this section, we'll guide you through paying for therapy with FSA and HSA accounts.
Step-by-Step Guide
- Check your account balance and plan details. Contact your plan administrator if necessary.
- Confirm your therapist is licensed, sessions are eligible, and they can provide you with a proper itemized receipt.
- Pay with your HSA or FSA card, or submit receipts for reimbursement.
- If you are receiving reimbursement, you may be able to deposit funds directly into your account or write a check from your HSA account.
Documentation You May Need
In most cases, itemized invoices are all that’s needed for therapy treatment for a diagnosable condition. Sometimes, your HSA or FSA administrator may ask for diagnosis and treatment codes.
Some services require a Letter of Medical Necessity (LMN). This letter states the diagnosed condition and why therapy is the recommended treatment plan. LMNs are valid for one year.
Keeping Track for Tax Purposes
Ensure that you save your statements and receipts to demonstrate proof of payment. This ensures that you have the necessary paperwork if you do get audited.
Planning Your Therapy Budget
In this section, we will go over how you can organize your therapy budget.
Estimate Costs in Advance
Knowing typical session fees and frequency can help you estimate costs in advance. The average cost of therapy without insurance ranges from $100 to $250 per session. However, prices can change based on where you are, the therapist’s education, and your insurance.
Octave’s Therapy Cost Calculator can help estimate costs based on your state and insurance provider.
The frequency of sessions also helps you estimate monthly costs. Often, people attend therapy once per week, especially when starting. But more or less frequent sessions may be recommended based on your situation. When you first start seeing a therapist, they’ll develop a treatment plan, which lets you know the estimated frequency and number of sessions.
Understand Your HSA/FSA Limits
HSAs have contribution limits, which cap the amount that you can contribute to your account each year. Knowing these limits can help you estimate if you’ll have enough money in your account to cover all or part of your therapy costs. You can also plan how much you’ll contribute to your HSA each year based on your projected mental health costs. For 2026, the HSA contribution limit is $4,400 for self-only and $8,750 for family. Individuals over the age of 55 also have a catch-up contribution limit of $1,000.
Because FSAs don’t roll over, it’s important to know your spending deadlines to ensure that you don’t lose any of your benefits. The FSA spending deadline is on December 31st each year. Some employers provide a grace period, extending the deadline to March 15th. Others allow a rollover of up to $680 for 2026 plans. Most FSAs also have a run-out period, which allows you until March 31st to submit receipts for expenses from the previous year. However, these deadlines vary by plan, so it’s important to contact your plan administrator for specific details.
Tips for Making Funds Go Further
If you’re paying for therapy out of pocket, look for therapists who offer sliding scale options or packaged discounts. This can make your HSA and FSA funds go further because your initial cost per therapy session is lower. Some employers provide Employee Assistance Programs (EAPs) or wellness stipends. These can help pay for therapy sessions before you use your HSA or FSA funds.
Individuals who have insurance will also want to check their insurance plans. Choosing therapists who are in-network often provides more coverage, reducing out-of-pocket costs. Group therapy sessions and less frequent individual therapy sessions with structured homework can also make funds go further.
Why Octave Makes It Simple
Octave can make it easier for you to use your HSA and FSA benefits.
Transparent Pricing and Receipts
Octave provides clear invoices that meet HSA and FSA standards and make it easy to submit receipts to seek reimbursement. These receipts will be sent to your email after your payment has been processed.
Therapist-Led, Evidence-Based Care
All of Octave’s therapists are licensed clinicians who provide evidence-based care. This means that therapy sessions qualify as eligible medical expenses.
Supportive Care Team
Navigating therapy payments can seem overwhelming, but you don’t have to go it alone.
Octave's care team can give you guidance on how to use your HSA and FSA with confidence.
Ready to Use Your HSA or FSA for Therapy?
These steps can help you get started using your HSA or FSA for therapy.
Don't Leave Benefits Unused
When using FSA for mental health, it’s important to know that FSAs have a “use it or lose it” rule, so you’ll want to ensure that you use your funds before the end of the year so they don’t go unused. Many plans allow you to submit receipts from the prior year during the run-out period (often until March 31), even though the plan year has ended. It’s also important to note that if you do leave your job, you will lose access to your FSA. Being aware of these facts can help you plan to get the most out of your FSA.
Take the First Step Today
Starting therapy can be overwhelming, especially when you’re figuring out finances. Talk with our team about payment options to understand more about how you can fit mental health care into your budget.
