Can HSA Be Used for Contact Lenses?
Understand how your Health Savings Account (HSA) can cover vision care, including contact lenses and related medical expenses.
A Health Savings Account (HSA) is a tax-advantaged savings account designed to help individuals save and pay for qualified medical expenses. Contributions to an HSA are tax-deductible, funds grow tax-free, and withdrawals for eligible healthcare costs are also tax-free.
Understanding HSA-Eligible Medical Expenses
The Internal Revenue Service (IRS) defines a “qualified medical expense” as costs incurred for the diagnosis, cure, mitigation, treatment, or prevention of disease, or for the purpose of affecting any structure or function of the body. Expenses must be primarily for medical care to be eligible for HSA use. This definition includes payments for services rendered by licensed medical practitioners, as well as the costs of equipment, supplies, and diagnostic devices. For a comprehensive list of eligible expenses, individuals can refer to IRS Publication 502.
Contact Lenses and Related Items
Prescription contact lenses are considered qualified medical expenses and are eligible for purchase with HSA funds. In addition to the lenses themselves, various related items and services are also HSA-eligible. This includes contact lens solutions, such as cleaning, disinfecting, and saline solutions, which are medically necessary for the proper care and maintenance of prescription lenses. Contact lens cases, which are used for storage and hygiene, also qualify as an eligible expense. Eye exams specifically conducted to obtain a contact lens prescription or for fitting purposes are covered, as are follow-up visits related to contact lens care.
It is important to distinguish between corrective and cosmetic uses; contact lenses purchased solely for cosmetic purposes, without a medical necessity or prescription for vision correction, are not eligible. Similarly, general over-the-counter eye drops intended only for dryness relief without a doctor’s diagnosis of a specific medical condition, like dry eye disease, may not qualify. Eligibility hinges on the primary medical purpose of the item or service.
Using Your HSA and Record Keeping
Utilizing HSA funds for eligible medical expenses can be done through several practical methods. Many HSA providers issue a debit card, allowing for direct payment at the point of service. Alternatively, individuals can pay for expenses out-of-pocket and then reimburse themselves from their HSA. This reimbursement can occur anytime, even years after the expense was incurred, provided the HSA was established before the expense.
Maintaining detailed records is crucial for all HSA transactions. The IRS requires account holders to keep documentation to prove that distributions were used exclusively for qualified medical expenses. Essential records include itemized receipts, Explanation of Benefits (EOBs) from insurance providers, and any doctor’s notes or prescriptions that substantiate the medical necessity of an expense. These records are vital for tax purposes and in case of an IRS audit, as insufficient documentation can lead to penalties. It is generally advisable to retain these records for at least three to seven years, or as long as the tax return is subject to audit.