What Qualifies As An HSA Eligible Expense?

I was recently shopping for a sauna and was surprised to see a note from several sellers saying that “your purchases may be HSA eligible,” which got me thinking. What other purchases might be eligible?

What Is An HSA?

A health savings account lets you save money for various healthcare expenses. You contribute money to an HSA on a pre-tax basis (you won’t owe income taxes on your contributions each year). From there, you can use your HSA funds to pay for (or reimburse yourself for) healthcare costs. While your HSA funds can be used anytime, you can only contribute to a health savings account when you have an HSA-eligible healthcare plan, called a High Deductible Health Plan (HDHP).

If you aren’t using your HSA funds, you can earn interest on the balance or even invest your HSA balance. Your interest or investment gains will be tax-free if you eventually use the fund for qualified medical expenses.

What Are HSA Qualifying Expenses?

A wide variety of things could be considered a qualifying expense for HSA reimbursement. Some are obvious, like medical copays, dental cleanings, prescriptions, daycare, or au pair services. Others are less obvious, like over-the-counter drugs or even sleep aids. Surprisingly, you can’t pay health insurance premiums with HSA funds. The exception to this is that Medicare premiums are eligible for HSA reimbursement.

Related: How To Avoid Healthcare Expenses Ruining Your Retirement

What Are Health Savings Accounts Typically Used For?

For many people, it is easy to spend your HSA balance as you incur ordinary medical, dental, or vision expenses. Picture your dental cleanings, annual physicals, and all the tests that go with them and adjustments to your eyeglasses or contacts.

For those with larger HSA balances, there is an even longer list of reimbursable healthcare expenses. You may even be able to cover health-related travel expenses. A friend recently traveled from Los Angeles to see a specialist at the Mayo Clinic. He could likely be reimbursed for his medical treatments at the clinic, his flight, hotel, meals, and Uber
UBER
.

What Can’t You Use HSA Funds For?

As you can see by the list of HSA-eligible medical expenses below, not everything health-related can be reimbursed from your health savings accounts. I won’t list everything you can’t use your HSA funds for. Still, this list would include expenses that won’t meaningfully promote the healthier function of your body or specifically be connected to preventing or treating an illness or disease. Some common examples would include supplements or even weight loss programs that a physician doesn’t specifically prescribe.

When Should You Use Vs. Save Your HSA Funds?

If you are in good financial shape, consider investing your contributions to an HSA long-term. If you leave the funds invested, you can get the benefits of compound interest and still reimburse yourself for current medical expenses at a later date.

Many of my financial planning clients treat their HSA as an additional retirement account that they can turn into essentially a tax-free income stream to pay for medical expenses in the future (or from the past). Contribute what you can each year to the HSA (ideally max it out), invest the funds, and set up a file on your computer (or in the cloud) to save all your medical reimbursable receipts in one place. Once you need some money (or retire), reimburse yourself for years of medical expenses from your accumulated HSA funds.

If you are drowning in credit card debt, your strategy might differ. It would help if you contributed to an HSA to get a tax deduction. However, you may want to reimburse yourself for medical expenses as they come in. There is no reason to let those medical expenses sit on a credit card with interest above 20%.

HSA Expense ELIGIBILITY LIST

As a financial planner, I strive to help you make the most of your available investment, retirement, and other tax-favored accounts like an HSA. Keep reading as we share a long list of medical expenses that your HSA should reimburse.

The rules and regulations could change, so refer to your plan’s specific reimbursable expense guidelines. How purchases are described or coded could affect whether your HSA will reimburse you. For example, suppose you pay for a prescription at your pharmacy, but the only proof of purchase is your credit card bill showing the pharmacy’s name. In that case, you probably don’t have enough evidence to prove your reimbursable expense. On the flip side, if you have a detailed receipt showing the prescription’s name or at least says “pharmacy,” you will be in better shape.

Common Reimbursable HSA Medical Expenses

A wide variety of medical expenses are reimbursable from your HSA balance. This list includes some of the most common reimbursable health savings account expenses.

• Acupuncture
• Artificial limbs
• Birth control
• Blood sugar test kits for diabetics
• Colonoscopy
• Chiropractor
• Contact lenses and solutions
• COVID-19 tests
• Crutches
• Dental Visits
• Doctor’s office visits and copays
• Eligible long-term care insurance premiums
• Eyeglasses
• Feminine hygiene products
• Fertility enhancement (including in-vitro fertilization)
• Flu shots
• Guide dogs
• Hearing aids
• Infertility treatment
• Insulin
• Lab fees
• Long-term care services
• Medical alert bracelet
• Medical records charges
• Orthodontics
• Orthotic Inserts
• Over-the-counter medicines and drugs (see more information below)
• Personal protective equipment (PPE) like masks and hand sanitizer
• Physical therapy
• Prescriptions
• Psychiatric care
• Psychologist
• Rehab
• Special education expenses that include tutoring for a child with learning disabilities caused by mental impairments (recommended by a doctor)
• Speech therapy
• Stop-smoking programs (including nicotine gum or patches, if prescribed)
• Surgery
• Vaccines
• Vasectomy
• Vision exam
• Walker, cane
• Wheelchair

HSA Reimbursable Over-The-Counter Medications

Many medical ailments can be treated with over-the-counter medications. Here are a few items your HSA should reimburse you without needing a prescription.

• Acid controllers
• Acne medicine
• Allergy medicine
• Anti-diarrheal medicine
• Cold and flu medicine
• Eye drops
• Feminine products
• Hemorrhoid treatment
• Laxatives or stool softeners
• Motion sickness medicines
• Nasal sprays
• Ointments for cuts, burns, or rashes
• Pain relievers, such as aspirin or ibuprofen
• Sinus medicine
• Sleep aids

Services That May Be Eligible With A Completed Medical Necessity Letter

The list of medical expenses that can be reimbursed from an HSA gets longer if you have a completed medical necessity letter from a doctor.

• Weight Loss Programs – This will only be reimbursable if it is meant to treat a specific disease.
• Compression Wear – Think antiembolism socks or hose. It is commonly worn when flying long distances.
• CPR Training
• Special Home Modification – Specifically for a physically disabled person.

Can You Use Your HSA For Spousal Or Dependent Medical Expenses?

Yes, you can pay for qualified medical expenses for your spouse or dependent with your HSA.

2024 HSA Contribution Limits

The health savings account contribution limits for 2024 are $4,150 for individuals and $8,300 for family coverage. Those 55 and older can make a catch-up contribution of $1,000.

If you were to contribute $8,300 per year for 20 years (assuming a 10% return on investments), you could have around $475,000 to pay for medical expenses. Remember, this could be for medical expenses you have already incurred or expect to incur.

Related: Are You On Track For The Retirement You Want?