I am a US expat living abroad. As some of you may know, I still have to pay US taxes on my foreign income, even though I've been abroad for more than 5 years.

That said, I obviously want to minimize my taxable income. I'm looking into an HSA as one option to do this. It seems I only need a US address to open an HSA account, but can I deduct the contributions to this HSA from my taxable income and use this money to pay my medical expenses. I do have a high deductible health plan (HDHP), but based in the country I currently reside.

My question: Does anyone see any problems with doing this? Obviously I'd need an account that allows ATM withdrawals, since the healthcare providers here won't likely accept a check or debit payment.

  • I don't know the answer to this question, it likely comes down to whether your high-deductible plan meets all IRS qualifications. Jan 27, 2014 at 20:21
  • Look into your HSA-specific rules. I can write myself a check for expenses that I keep a paper trail of.
    – THEAO
    Jan 28, 2014 at 17:18

4 Answers 4


Look here: http://www.opm.gov/healthcare-insurance/healthcare/health-savings-accounts/frequently-asked-questions/

Under HSA Withdrawal:

Can I use my HSA to pay for medical services provided in other countries, such as Mexico and Canada?


  • 2
    Good answers quote from their sources. Sometimes links rot, and if there is no quote then you are left with a useless answer. Apr 16, 2015 at 21:22

The threshold question is whether you qualify. The IRS in Publication 969 on HSAs says that to qualify for tax benefits you must set up a tax-exempt trust or custodial account with an HSA trustee, such as bank, insurer, or other qualified trustee. You

Qualifying for an HSA

To be an eligible individual and qualify for an HSA, you must meet the following requirements.

  • You must be covered under a high deductible health plan (HDHP), described later, on the first day of the month.
  • You have no other health coverage except what is permitted under Other health coverage, later.
  • You are not enrolled in Medicare.
  • You cannot be claimed as a dependent on someone else's 2013 tax return.

Nothing in Pub 969 suggests a problem with living abroad or being foreign. As long as you have an HSA through your insurer or other trustee, and meet the other requirements, living abroad does not appear to present a problem.

There is no problem with withdrawing the money as cash versus swiping it directly, provided it goes to qualified medical expenses. I would endeavor to retain full and accurate receipts and account for all withdrawals, since a foreign address may raise some flags. In the event you do not receive receipts, notes and records you created yourself may be sufficient (particularly if you retain both hand-written contemporaneous notes and something like a spreadsheet .xlsx).

Your contributions to an HSA are deductible "above the line" on your Form 1040 at line 25 (with Form 8889). The accumulations and interest on the HSA are excluded from your gross income. Your employer's contributions to an HSA are excluded from your gross income (see I.R.C. § 106(d)). Remember that your calculation of medical expenses on Schedule A is reduced by the amount of your HSA withdrawals, which is equivalent to saying you can get a full deduction today at the expense of a very limited possible deduction later.

  • 3
    I think qualifying for an HSA account is not really the problem. I think, rather, that my foreign health insurance plan may not meet the requirements for a "HDHP" as defined by the IRS. That would be my concern.
    – alan
    Apr 1, 2014 at 6:54
  • 1
    Did you review Pub 969 p3 & p4? It gives some details on HDHPs, including minimum and maximum deductibles. It then gives examples. If your plan does not meet these guidelines, then you can consider asking a broker or insurer for alternative plans that may comply.
    – NL7
    Apr 1, 2014 at 14:33
  • 2
    It's worth noting (although not relevant to the OP's situation) that you don't need to have an HDHP to make withdrawals. If you have left the US and have little income there, you can continue to draw down from the HSA, whether or not you have a HDHP.
    – poolie
    Jul 30, 2014 at 23:43

My HSA custodian allows me to write a check to myself, to reimburse eligible expenses. I am subject to audit for those expenses. Nothing I've seen in the IRS rules seems country specific: there is just a threshold for how high the deductible must be, and an exhaustive list of what's eligible for reimbursement.


I'd be cautious about getting incomplete answers on an Internet forum for an issue that is so black and white to the government. According to my understanding any HSA can only be spent on American healthcare expenses. So, if you go to the hospital outside of the US- even if just across the border in Canada, you are not legally allowed to use your HSA funds. The issue is not in getting the funds in your pocket, as you have a check sent to you without any proof of medical expense. The issue is that in an audit you need to show receipts for qualifying US expenses, and if you don't have them, the tax man will spank you.

  • 8
    This answer would be great if it came with a citation, an IRS document quote and/or link. Dec 26, 2014 at 13:43

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