Are Contact Lenses and Other Vision Care HSA Eligible?

A Health Savings Account (HSA) is a tax-advantaged savings account designed to help individuals save and pay for qualified medical expenses. This financial tool offers a way to manage healthcare costs while providing significant tax benefits. Funds contributed to an HSA are typically pre-tax, grow tax-free, and distributions used for eligible healthcare costs are also tax-free.

Eligible Vision Expenses

Contact lenses are an eligible medical expense when prescribed by an eye care professional for vision correction. This includes both daily disposables and extended-wear lenses, as their primary purpose is to address a medical condition. The costs associated with professional fittings for contact lenses also qualify.

Many other vision-related expenses qualify for HSA funds. Prescription eyeglasses, including prescription sunglasses, are eligible, as are eye exams for medical purposes. Also included are the necessary solutions and cases for proper care and maintenance of contact lenses. Vision correction surgeries, such as LASIK, are also eligible if medically necessary.

The underlying principle for HSA eligibility is medical necessity, meaning the item or service must be for the diagnosis, cure, mitigation, treatment, or prevention of disease, or for the purpose of affecting any structure or function of the body. This broad definition covers many vision care needs, including expenses to maintain or improve eye health and correct vision impairments. Even over-the-counter reading glasses are HSA-eligible because they provide vision correction.

Non-Eligible Vision Expenses

While many vision-related costs are HSA-eligible, certain items and services are excluded because they do not meet the criteria of medical necessity. Contact lenses purchased solely for cosmetic purposes, such as to change eye color without any corrective power, are not eligible expenses.

Similarly, non-prescription sunglasses that do not correct vision are not HSA-eligible. Extended warranties for eyeglasses or contact lenses also do not qualify. Expenses reimbursed by an insurance plan or employer are also not eligible for HSA use, as HSAs cover out-of-pocket costs not covered by other means.

Using Your HSA Funds

Utilizing HSA funds for eligible vision expenses is straightforward. Many account holders use a dedicated HSA debit card provided by their administrator. This card can be used directly at the point of purchase, similar to a standard debit card. Alternatively, individuals can pay for eligible expenses out-of-pocket and then reimburse themselves from their HSA, provided they maintain proper documentation.

Maintaining detailed records for all HSA-funded vision expenses is important for Internal Revenue Service (IRS) audits. These records should include receipts, invoices, and any relevant prescriptions. Each document should clearly state the date of service, the specific item or service purchased, the amount, and the provider’s name to substantiate the expense. Account holders are responsible for proving that distributions from their HSA were exclusively for qualified medical expenses and not previously reimbursed. Distributions for non-qualified expenses may be subject to a 20% penalty, in addition to being taxed as income.