You can receive a distribution from your HSA any time by check, debit card or Bill Pay . Distributions are tax-free if used for a qualified medical expense. It is your responsibility to determine if your distribution is a qualified medical expense. For more information on qualified medical expenses, talk to your accountant and/or review IRS Publication 502.

If the withdrawn funds are not used for qualified medical expenses, then you will have to include the distribution in income and pay an additional 20 percent tax in 2011.