Penalty Increase for Using Your HSA for Non-Qualified Expenses

The penalty for using your HSA funds for non-qualified medical expenses increased to 20% starting Jan. 1, 2011.

If you're younger than 65, the penalty for using HSA funds for non-medical expenses has now doubled from 10% to 20%. This penalty is in addition to the income tax you'll pay for using HSA funds for non-qualified expenses.