Are Cough Drops HSA Approved for Medical Expenses?

A Health Savings Account (HSA) is a tax-advantaged savings account designed to help individuals save and pay for qualified medical expenses. A common question arises regarding which specific items qualify for purchase with HSA funds, including everyday items like cough drops.

HSA Eligibility for Over-the-Counter Products

The Internal Revenue Service (IRS) defines qualified medical expenses as costs for the diagnosis, cure, mitigation, treatment, or prevention of disease, or for affecting any part or function of the body. Expenses that are merely beneficial to general health, such as vitamins or cosmetic procedures, do not qualify.

A significant change occurred with the Coronavirus Aid, Relief, and Economic Security (CARES) Act in 2020, which permanently updated the rules for over-the-counter (OTC) medications. Before this act, many OTC medicines required a doctor’s prescription to be HSA-eligible. The CARES Act removed this prescription requirement, making a wide range of OTC drugs and medicines, including pain relievers, cold medicines, and allergy medications, eligible for HSA funds without needing a doctor’s note. This change was made retroactive to January 1, 2020.

Cough Drops and HSA Eligibility

Most cough drops are considered eligible for HSA reimbursement due to their medicinal purpose. When used to alleviate symptoms such as a cough or sore throat, they fall under the definition of medical care. This includes medicated cough drops containing active ingredients like menthol or eucalyptus, which provide relief for irritated tissues in the throat.

It is important that the cough drops are intended for treating or preventing a specific medical condition, rather than being simply confectionery or general wellness products without active medicinal components. The primary intent must be therapeutic for the expense to qualify.

Using Your HSA for Qualified Medical Expenses

When using your HSA for eligible expenses, you have payment options. Many HSA providers issue a debit card specifically linked to your account, allowing you to pay directly at the point of sale. This method offers immediate access to your tax-advantaged funds for qualified purchases.

Alternatively, you can pay for eligible medical expenses out-of-pocket using personal funds and then seek reimbursement from your HSA. There is no time limit for requesting reimbursement, meaning you can pay for an expense today and reimburse yourself years later, provided the expense was incurred after your HSA was established. Regardless of the payment method, maintaining detailed records, such as itemized receipts, is crucial. These records are essential for tax purposes and verification if your HSA administrator or the IRS requests proof of eligibility.