Can I Use HSA for Allergy Medicine?

A Health Savings Account (HSA) is a tax-advantaged savings account designed to help individuals pay for qualified healthcare expenses. These accounts are available to those enrolled in a high-deductible health plan (HDHP), offering a way to save and spend money on medical costs with tax benefits. Understanding which expenses qualify for HSA use is important.

Understanding HSA-Qualified Medical Expenses

The Internal Revenue Service (IRS) defines what constitutes a “qualified medical expense” through its guidelines, primarily detailed in IRS Publication 502. An expense is considered qualified if its primary purpose is the prevention or alleviation of a physical or mental defect or illness. This means the expense must directly relate to medical care, which includes diagnosis, cure, mitigation, treatment, or prevention of disease.

Qualified medical expenses broadly cover a range of services and products intended to address health conditions. Common examples include fees for doctor visits, hospital care, prescription medications, and diagnostic services like lab tests and X-rays. Expenses that are merely beneficial to general health, such as vitamins or cosmetic procedures without a medical necessity, do not qualify.

Eligibility of Allergy Medicine

Allergy medicines are generally considered qualified medical expenses for HSA purposes. This eligibility extends to both prescription and over-the-counter (OTC) allergy medications, though the rules for OTC products have evolved. Prescription allergy medications have consistently been eligible for HSA reimbursement, provided they are prescribed by a licensed healthcare professional.

A significant change occurred with the passage of the Coronavirus Aid, Relief, and Economic Security (CARES) Act in March 2020. This legislation removed the requirement for a prescription for many OTC medications, including allergy medicines, to be considered HSA-eligible. As a result, common OTC allergy relief products such as antihistamines like loratadine (Claritin) or cetirizine (Zyrtec), nasal sprays like fluticasone (Flonase), and decongestants are now eligible without needing a doctor’s note. It is important that these medications are used for a medical condition, not for general health or cosmetic purposes, to maintain their eligibility.

Accessing Your HSA Funds

Utilizing HSA funds for eligible medical expenses offers several convenient methods. Many HSA providers issue a dedicated debit card, which functions similarly to a regular bank debit card. This card can be used directly at the point of purchase, such as a pharmacy, doctor’s office, or online medical supply store, allowing immediate payment for qualified expenses.

Alternatively, you can pay for eligible expenses out-of-pocket using personal funds and then reimburse yourself from your HSA. This reimbursement can be facilitated through various methods, including transferring funds directly from your HSA to your personal bank account, or in some cases, withdrawing cash from an ATM using your HSA debit card. There is generally no time limit to reimburse yourself for qualified medical expenses, provided the expense was incurred after your HSA was established.

For tax purposes and potential IRS audits, it is important to maintain detailed records for all HSA-funded expenses, regardless of the payment method. These records should include itemized receipts, Explanation of Benefits (EOB) statements from your insurance provider, and any relevant doctor’s notes or prescriptions. Maintaining these documents for at least three years, or as long as your HSA is open, is a recommended practice.