Can I Buy a Sauna With My HSA?

Health Savings Accounts (HSAs) offer a tax-advantaged way to save and pay for qualified medical expenses. Many individuals with high-deductible health plans utilize HSAs for various healthcare costs. A common question arises regarding the eligibility of certain purchases, such as saunas, for HSA reimbursement. Understanding the specific criteria for eligible expenses is important when considering less conventional health-related items.

Understanding What Qualifies as an HSA Expense

The Internal Revenue Service (IRS) defines what constitutes an eligible medical expense for HSA purposes. According to Internal Revenue Code Section 213, medical care expenses are amounts paid for the diagnosis, cure, mitigation, treatment, or prevention of disease, or for affecting any structure or function of the body. These expenses must primarily alleviate or prevent a physical or mental defect or illness. Expenses that are merely beneficial to general health, such as vitamins or a vacation, do not qualify.

Common eligible expenses include payments for doctor visits, prescription medications, dental care, and vision services. The IRS provides detailed guidance in Publication 502, which outlines a comprehensive list of eligible medical and dental expenses. While this publication covers many common expenses, additional items may qualify under the general definition of medical care.

Determining if a Sauna Qualifies

Saunas are not typically considered standard medical equipment; their eligibility for HSA reimbursement depends on specific medical conditions being met. For a sauna to qualify, its primary purpose must be medical care, not general health improvement or recreation. Merely using a sauna for relaxation or general wellness does not make it an eligible expense. There must be a direct link to the diagnosis, cure, mitigation, treatment, or prevention of a specific medical condition.

A physician’s recommendation or prescription is required to demonstrate medical necessity for items like saunas. This recommendation often takes the form of a Letter of Medical Necessity (LMN) from a healthcare provider. The LMN should clearly state the specific medical condition being treated or alleviated and explain how the sauna use is essential for that treatment, including recommended frequency or duration of use.

Required Documentation for Reimbursement

Maintaining records is essential when using HSA funds, particularly for items like saunas that require a Letter of Medical Necessity. Retain the physician’s letter or prescription that substantiates the medical necessity of the sauna. This document serves as proof that the purchase was for a qualified medical expense. Keep all receipts for the sauna purchase.

These documents are important for substantiating the expense in case of an IRS audit. While you may not need to submit these records when making a claim, you are responsible for proving the eligibility of any expense if requested by the IRS. Properly organized documentation ensures compliance and can prevent issues during an audit.

Implications of Non-Qualified Expenses

Using HSA funds for expenses that do not meet IRS eligibility criteria can lead to tax consequences. Any distributions from your HSA for non-qualified expenses are subject to income tax. The amount withdrawn for the non-qualified expense will be added to your gross income, potentially increasing your overall tax liability.

Non-qualified distributions may also incur an additional 20% penalty tax. This penalty applies if the account holder is under age 65 at the time of the non-qualified distribution. Account holders are responsible for determining expense eligibility and maintaining records to support all HSA distributions.