Can I Buy Contact Lenses With an HSA?
Understand how to confidently use your Health Savings Account (HSA) for contact lenses and vision care, including best practices for eligible purchases and record keeping.
Health Savings Accounts (HSAs) offer a tax-advantaged way to save and pay for qualified medical expenses. Contact lenses purchased with a valid prescription are generally considered an eligible expense, allowing you to utilize your HSA for these costs.
Understanding Eligible Vision Expenses
The Internal Revenue Service (IRS) defines medical expenses as costs associated with the diagnosis, cure, mitigation, treatment, or prevention of disease, or those affecting any part or function of the body. For contact lenses to qualify, they must be prescribed by an eye care professional for corrective vision purposes.
Beyond contact lenses, other vision-related items and services qualify for HSA funds. These include prescription eyeglasses, contact lens solutions, and eye exams. Expenses for cosmetic contact lenses or non-prescription sunglasses do not qualify, as they are not considered medically necessary.
How to Use Your HSA for Purchases
Utilizing your HSA for eligible purchases offers two methods: direct payment or reimbursement. Many HSA providers issue a debit card linked directly to your account. This method offers immediate access to your tax-advantaged funds for eligible expenses.
Alternatively, you can pay for eligible expenses out-of-pocket using personal funds and then seek reimbursement from your HSA. To do this, you submit a claim through your HSA administrator’s online portal or mobile application. Required documentation includes an itemized receipt or invoice detailing the service or product purchased. Some providers may also request an Explanation of Benefits (EOB) from your health insurance plan. There is no deadline for reimbursement, meaning you can pay for an expense today and reimburse yourself years later, provided the HSA was established when the expense was incurred.
Maintaining Purchase Records
Maintaining thorough records for all HSA-funded expenses is important. This practice is important for tax purposes and in case of an IRS audit. The IRS requires you to demonstrate that distributions from your HSA were used exclusively for qualified medical expenses.
Key documents to retain include itemized receipts, invoices, and copies of prescriptions. Keep these records for at least three years from the date you file your tax return, or as long as your HSA remains open, whichever period is longer. Digital storage, such as scanning and saving documents to a dedicated folder, can help organize these records. Failure to provide adequate documentation during an audit could result in the distribution being taxed as ordinary income, along with a potential 20% penalty.