Can I Buy Allergy Medicine With HSA?
Navigate how to confidently use your HSA for allergy medicine. This guide provides the essential framework for accurate health expense management.
Health Savings Accounts (HSAs) offer a tax-advantaged way to save and pay for qualified medical expenses. These accounts are paired with high-deductible health plans, allowing individuals to use pre-tax dollars for healthcare costs. A common question arises about using HSA funds for everyday needs, such as allergy medicine. This article clarifies what allergy medications qualify as eligible expenses and how to properly use HSA funds for these purchases.
Determining Eligible Allergy Medicine
The eligibility of allergy medicine for HSA funds changed with the Coronavirus Aid, Relief, and Economic Security (CARES) Act of 2020. This legislation removed the prescription requirement for over-the-counter (OTC) medications to be considered qualified medical expenses. Many common OTC allergy medicines are now eligible for purchase with HSA funds.
Eligible allergy medicines include antihistamines, decongestants, nasal sprays, and eye drops for allergy symptoms. These products are considered medical care expenses because they diagnose, cure, mitigate, treat, or prevent a disease or affect a function of the body. Distinguish these from general wellness products or items beneficial to general health, which do not qualify as medical expenses. The expense must be primarily for a medical condition like allergies, not for cosmetic purposes.
Essential Documentation for Your Records
Maintaining detailed records for all Health Savings Account (HSA) expenditures is important. These records serve as substantiation if the Internal Revenue Service (IRS) audits your account. Proper documentation confirms distributions were used exclusively for qualified medical expenses and were not reimbursed from other sources.
Key documents to retain include itemized receipts from the date of purchase, clearly showing the name of the allergy medicine, the amount paid, and the vendor. While OTC allergy medicine no longer requires a prescription for eligibility, keeping a doctor’s note could be beneficial for unusual or specialized items to further support the medical necessity. Retain these records for at least three years from the tax filing deadline. Some financial professionals suggest keeping them indefinitely for all significant medical expenses.
Accessing Your HSA Funds
Two main methods exist for utilizing HSA funds to pay for allergy medicine. One method involves using an HSA debit card directly at the point of purchase, such as a pharmacy or retail store. This method instantly applies pre-tax funds to the eligible expense. Some HSA providers also offer options for online payments or checkbooks for direct payment.
Alternatively, you can pay for the allergy medicine out-of-pocket using personal funds and then reimburse yourself from your HSA. This involves submitting a claim to your HSA administrator, often through an online portal, where you input expense details and select a reimbursement method, such as a direct bank transfer. There is no time limit for when you must reimburse yourself, allowing for flexibility in managing your funds. Retain the detailed documentation discussed previously. You remain accountable to the IRS for proving the eligibility of all expenses.