Can I Buy a Hot Tub With My HSA?

A Health Savings Account (HSA) offers a valuable way to pay for healthcare expenses with tax-advantaged funds. Many individuals wonder if certain purchases, like a hot tub, can qualify as an eligible expense. Generally, a hot tub is not considered an HSA-eligible expense because it is typically viewed as a personal or recreational item. However, a hot tub might qualify under specific circumstances if it is primarily for medical care and prescribed by a physician for a diagnosed medical condition. This article explains the criteria for HSA-eligible expenses and how a hot tub could potentially fit these requirements.

Understanding HSA Eligible Expenses

Health Savings Accounts are designed to help individuals save and pay for qualified medical expenses. The Internal Revenue Service (IRS) defines these expenses as costs incurred primarily for the diagnosis, cure, mitigation, treatment, or prevention of disease, or for the purpose of affecting any structure or function of the body. Common examples of eligible expenses include doctor visits, prescription medications, dental care, and vision care.

The expense must be primarily for medical care, meaning its main purpose is to alleviate a physical or mental defect or illness. If an item serves both a medical and personal purpose, only the portion directly related to medical care may be eligible. IRS Publication 502 provides guidance on what constitutes a qualified medical expense.

Hot Tubs as Medical Expenses

A hot tub is generally not considered an HSA-eligible expense because it often serves recreational or general wellness purposes. However, an exception exists if the hot tub is purchased primarily for medical care and is medically necessary for a specific condition. For instance, individuals suffering from severe arthritis, chronic back pain, or certain circulatory issues might find therapeutic benefits from a hot tub. In such cases, the hot tub’s primary function must be to alleviate the medical condition, not merely for relaxation or personal enjoyment.

To establish medical necessity, a Letter of Medical Necessity (LMN) from a qualified healthcare provider is required. This letter must clearly state the patient’s diagnosis and explain how the hot tub specifically treats or alleviates the medical condition. The LMN should also specify the duration of the need and outline how it affects a specific body function or structure. If the hot tub is considered a capital expense, such as a permanent home improvement, its eligibility hinges on whether its main purpose is medical care. Only the medically necessary portion of the cost would be eligible for HSA reimbursement.

Documentation and Reimbursement

Maintaining thorough documentation is important when using HSA funds for expenses like a hot tub, especially given IRS guidelines. You must keep the Letter of Medical Necessity, along with receipts for the hot tub purchase and any medically necessary installation costs. These records are necessary for substantiating the expense’s eligibility, particularly if your account is subject to an IRS audit. The burden of proof for qualified expenses rests solely with the HSA account holder.

You can use your HSA funds in one of two ways: by paying directly with an HSA debit card, or by paying out-of-pocket and then seeking reimbursement from your HSA administrator. For reimbursement, you will need to submit a claim with supporting documentation, including the receipt, date of purchase, and a description of the expense. There is no time limit for requesting reimbursement, meaning you can pay for qualified medical expenses out-of-pocket and reimburse yourself years later, provided you retain all necessary documentation. It is advisable to keep all HSA-related records for at least seven years, or as long as your account is open, to safeguard against potential audits. Failure to provide proper documentation for non-qualified distributions can result in the distributed amount being subject to income tax and a 20% penalty.