Can HSA Be Used for Fertility Treatments?

A Health Savings Account (HSA) offers a tax-advantaged method for individuals to save and pay for qualified medical expenses. Paired with a high-deductible health plan (HDHP), contributions can be made on a pre-tax or tax-deductible basis. Funds within an HSA grow tax-free, and distributions for eligible healthcare costs are also tax-free, providing a triple-tax advantage. The money in an HSA remains with the account holder, even when changing employers or health plans, making it a portable savings tool for current and future healthcare needs.

Understanding Qualified Medical Expenses for Fertility

The Internal Revenue Service (IRS) defines qualified medical expenses as amounts paid for the diagnosis, cure, mitigation, treatment, or prevention of disease, or for treatments affecting any part or function of the body. While infertility might not always be classified as a disease, the IRS generally recognizes fertility enhancement and related treatments as legitimate medical expenses. This broad interpretation allows many fertility-related costs to be eligible for HSA use.

This eligibility extends to expenses incurred by the account holder, their spouse, or any qualified dependents. Expenses must address a medical condition impacting the body’s structure or function. Treatments aimed at enabling conception or addressing reproductive challenges align with the IRS’s definition of qualified medical care. These expenses must be unreimbursed by insurance or other sources to be considered for HSA distributions.

Specific Fertility-Related Expenses Covered by HSA

Many common fertility treatments and associated services are qualified medical expenses eligible for HSA funds. In vitro fertilization (IVF) is widely covered, including procedures for egg and sperm retrieval, embryo creation, and embryo transfer. Temporary storage of eggs, sperm, and embryos qualifies as an eligible expense.

Intrauterine insemination (IUI) is covered, including associated costs like sperm washing and medical consultations. Fertility medications, such as ovulation induction drugs, and diagnostic tests like semen analyses and hormone level tests, are eligible expenses. Consultations with fertility specialists and surgical procedures, including operations to reverse prior surgeries preventing conception, are qualified medical expenses.

While most direct fertility treatments are eligible, certain related expenses may not qualify. For instance, costs associated with a surrogate mother are generally not covered unless the surrogate is a qualified dependent of the taxpayer. Expenses for general health or cosmetic purposes not directly related to a diagnosed medical condition are typically not eligible. Confirm the eligibility of specific expenses with your HSA provider or by consulting IRS Publication 502.

Documentation and Substantiation Requirements

Maintaining thorough documentation for medical expenses paid with HSA funds is important. The IRS requires account holders to keep records to substantiate that distributions were used for qualified medical expenses and were not reimbursed by other means. This documentation is crucial for tax purposes and can be requested in the event of an IRS audit.

Key documents to retain include detailed receipts and invoices from healthcare providers, pharmacies, and clinics, clearly showing the service or product, the date, and the amount paid. Explanation of Benefits (EOB) statements from your health insurance provider are important, as they confirm which portion of a service was not covered by insurance. In some cases, a letter of medical necessity from a healthcare provider may be required to demonstrate that a specific treatment or item is medically necessary and not for general health or cosmetic purposes.

These records serve as proof that HSA funds were used appropriately, ensuring distributions remain tax-free. Without proper substantiation, funds withdrawn for non-qualified expenses can become taxable and may be subject to an additional 20% penalty if the account holder is under age 65. Organizing and securely storing these records is a fundamental responsibility of every HSA holder.

Accessing and Using HSA Funds for Treatments

Using HSA funds for fertility treatments offers flexibility in payment methods. One common approach is to use an HSA-linked debit card directly at the point of service, similar to a regular debit card. This allows for immediate payment at a doctor’s office, pharmacy, or other medical merchant, with the funds instantly deducted from your HSA balance. Many HSA providers offer online payment portals or check-writing capabilities, enabling direct payments to providers or for medical bills.

Alternatively, you can choose to pay for qualified medical expenses out-of-pocket using personal funds and then reimburse yourself from your HSA at a later time. This strategy can be beneficial if you wish to allow your HSA funds to continue growing through investments. Reimbursement can typically be done by transferring money from your HSA to your personal bank account online, requesting a check from your HSA provider, or even making an ATM withdrawal with your HSA debit card. The expense must have been incurred after the HSA was established for the reimbursement to be tax-free.