You cannot withdraw money from your Fidelity HSA debit card at an ATM, and you cannot ask for cash back at the register. The card is built for one job: paying eligible medical merchants directly. If you need HSA dollars in your own bank account, skip the card and request an electronic transfer through Fidelity’s website, which usually lands in one to three business days.1Fidelity Investments. How Hold Times and Processing Periods Affect the Status of Your Transfer
What the Card Can and Can’t Do
The card is issued by PNC Bank and carries the Visa logo, so it works anywhere Visa debit is accepted.2Fidelity Investments. How to Open an HSA At a pharmacy, doctor’s office, hospital, or similar provider, you can run it as credit with a signature or as debit with your PIN. Fidelity checks your available cash in real time and declines the charge on the spot if the balance is short.
What the card will not do is give you cash. No ATM withdrawals. No cash back during a purchase.3Fidelity Investments. ATM/Debit Cards and HSA Debit Cards Fidelity’s standard brokerage debit card does allow ATM withdrawals; the HSA version is different because HSA money carries special tax treatment, and loose cash withdrawals are hard to tie to a qualifying medical bill.
A few other card mechanics worth knowing:
- Daily spending limits reset at midnight Eastern Time, and you can see your current limit and remaining balance after logging in on Fidelity’s site.
- Purchases made outside the United States carry a 1% foreign transaction fee, whether or not currency is converted.3Fidelity Investments. ATM/Debit Cards and HSA Debit Cards
- If the card is lost or stolen, contact Fidelity to freeze it and order a replacement through your online account.
Only Cash in Your Core Position Is Available
Every card charge pulls from your account’s core position, which is where uninvested cash sits.4Fidelity Investments. HSA Terms and Conditions If you’ve invested part of your HSA in mutual funds or stocks, those dollars are not spendable. To use them, you have to sell the investment, wait for the trade to settle, and let the proceeds move into the core position. Only then will the card (or a bank transfer) have access to that money.
Moving HSA Money to Your Personal Bank Account
When you need to pay a provider who doesn’t take cards, or you want to reimburse yourself for a bill you already paid out of pocket, use Fidelity’s online transfer tool instead of the card.
Log in and open the Transfers section. Pick your HSA as the source, your linked external bank account as the destination, enter the dollar amount, review, and submit. Fidelity gives you a confirmation number. The money typically posts to your bank in one to three business days.1Fidelity Investments. How Hold Times and Processing Periods Affect the Status of Your Transfer Your bank’s routing and account numbers need to be linked to your Fidelity profile before you start.
Whichever way the money leaves the HSA, keep the receipt: provider name, date of service, and amount paid. You don’t send it in with your return, but the IRS expects you to produce it on request.5Internal Revenue Service. Publication 969 – Health Savings Accounts and Other Tax-Favored Health Plans
What It Costs If the Withdrawal Isn’t for Medical Care
HSA distributions are tax-free only when the money pays for qualified medical expenses. Anything else gets added to your gross income for the year, and if you’re under 65 there’s an additional 20% tax on the non-qualified amount.6Office of the Law Revision Counsel. 26 USC 223 – Health Savings Accounts Withdraw $1,000 for a non-medical purchase in the 22% bracket and you owe roughly $220 in income tax plus $200 in penalty, about $420 gone.
The 20% additional tax is waived in three situations:
- You’re 65 or older. The distribution is still taxable, but the penalty drops off.
- You become disabled, as defined by the tax code.
- The distribution is made after death, in which case your beneficiary receives the funds without the additional tax.
Qualified medical expenses are defined broadly and cover you, your spouse, and your dependents, including doctor and hospital visits, prescriptions, dental and vision care, mental health treatment, and equipment such as hearing aids and blood sugar test kits. Over-the-counter medications and menstrual care products qualify without a prescription.5Internal Revenue Service. Publication 969 – Health Savings Accounts and Other Tax-Favored Health Plans Cosmetic procedures generally don’t qualify unless they correct a deformity from a congenital condition, injury, or disease.7Internal Revenue Service. Publication 502 – Medical and Dental Expenses
A small number of states don’t recognize the federal tax-free treatment of HSA contributions and earnings, so residents there may owe state income tax even on qualified medical withdrawals.
If You Pull Money Out by Mistake
Say you tap the HSA for something you thought was medical and later realize it wasn’t, or you meant to use a different card entirely. The IRS lets you return the money and avoid both income tax and the 20% penalty when the withdrawal was a mistake of fact due to reasonable cause, as long as you put the funds back by the tax filing deadline (not counting extensions) for the first year you knew or should have known about the mistake.8Internal Revenue Service. Instructions for Forms 1099-SA and 5498-SA
To fix it with Fidelity, fill out their “Return of Mistaken Distribution” form and mail it with a check payable to Fidelity Investments. Write your HSA account number and “Mistaken Distribution” in the memo line.9Fidelity Investments. Return of Mistaken Distribution – Fidelity Health Savings Account Return the money in time and Fidelity won’t report it as a taxable distribution on your Form 1099-SA, or will correct a form already filed.