Can I Buy Melatonin With My HSA?

A Health Savings Account (HSA) is a tax-advantaged savings account for healthcare expenditures. These accounts offer a triple tax advantage: contributions are tax-deductible, earnings grow tax-free, and withdrawals for qualified medical expenses are also tax-free. Understanding HSA eligibility for medical products and services is important for account holders. This article clarifies whether melatonin can be purchased with HSA funds and outlines eligibility conditions.

Understanding HSA Eligibility for Over-the-Counter Items

Rules for over-the-counter (OTC) medications and health products eligible for HSA have changed significantly. Prior to 2020, most OTC items required a prescription from a physician to be considered eligible for HSA funds. The Coronavirus Aid, Relief, and Economic Security (CARES) Act, enacted in March 2020, permanently changed this landscape by making many OTC medicines and drugs eligible for HSA, FSA, and HRA reimbursement without a prescription, retroactive to January 1, 2020. This legislative change expanded the range of common items, such as pain relievers, cold and flu products, and first-aid supplies, that can now be purchased with HSA funds.

Despite this broad expansion, certain items still necessitate specific documentation to qualify. The IRS defines qualified medical expenses as amounts paid for the “diagnosis, cure, mitigation, treatment, or prevention of disease, or for the purpose of affecting any structure or function of the body.” This definition is important when an item has both medical and non-medical uses. For products not clearly defined as “medicine” or considered “merely beneficial” for general health, “medical necessity” applies. While many common OTCs are now eligible, some items may still require a doctor’s note or a Letter of Medical Necessity (LMN) to substantiate their medical purpose.

Melatonin and HSA Eligibility Requirements

Melatonin, a sleep hormone available as a supplement, requires specific documentation for HSA eligibility. Unlike some other common OTC medications that became eligible without a prescription under the CARES Act, melatonin is often classified as a dietary supplement. IRS guidelines stipulate that HSA funds can only be used for products or services medically necessary to treat, diagnose, or manage a specific health condition.

Because melatonin is frequently used for general wellness or to support healthy sleep patterns without a diagnosed medical condition, it does not automatically meet the criteria for medical necessity. To qualify for HSA reimbursement, a healthcare provider must determine that melatonin is medically necessary for treating a specific condition, such as chronic insomnia or a sleep disorder. In such instances, a Letter of Medical Necessity (LMN) is required to justify its use. This LMN should outline the patient’s diagnosis, the reason for recommending melatonin, and its role within the treatment plan, including dosage and duration. It is important that the letter comes from a licensed medical practitioner and includes their credentials, contact information, and signature.

Documentation and Reimbursement Process

Once documentation, such as a doctor’s note or Letter of Medical Necessity, is secured for your melatonin purchase, you can use your HSA funds or seek reimbursement. HSA funds can be accessed in a few ways. Many HSA administrators provide a dedicated debit card that can be used at the point of purchase for eligible expenses. However, if a vendor does not accept the HSA debit card, or if you prefer to pay out-of-pocket, you can later seek reimbursement from your account.

For reimbursement, you will need to gather all required documentation, which includes itemized receipts for the purchase of melatonin and the previously obtained doctor’s note or LMN. Most HSA administrators offer an online portal or specific forms for submitting claims. Access your account, navigate to the reimbursement section, and upload copies of your receipts and the LMN. It is advisable to verify your specific HSA administrator’s submission process, as procedures and processing times, which can range from a few days to several weeks, may vary.

Maintaining meticulous records is important for managing an HSA, especially for tax purposes and IRS audits. You should retain receipts, the doctor’s note or LMN, and any Explanation of Benefits (EOB) statements from your insurance provider that document the medical expense. The IRS requires account holders to keep records sufficient to demonstrate that HSA distributions were used exclusively for qualified medical expenses, had not been reimbursed from another source, and were not claimed as an itemized deduction. These records should be kept for at least three years, corresponding to the statute of limitations for IRS audits, or as long as the HSA account remains open, whichever is longer.