How are distributions from an HSA taxed?

Distributions are taxed differently based on how they are used. Distributions from an HSA used exclusively to pay for the qualified medical expenses of you, your spouse, or eligible dependents generally are excludable from gross income. The amount of any distribution not used exclusively for qualified medical expenses will be includable in your gross income and may be subject to an additional premature distribution penalty tax. This penalty tax does not apply to distributions made after your death, disability, or attainment of age 65. In addition, distributions made for expenses that are reimbursed by another health plan are includable in your gross income, whether or not the other health plan is a high-deductible health plan (HDHP).