Can I Use HSA for IVF and Related Expenses?

Health Savings Accounts (HSAs) offer a tax-advantaged way for individuals to save and pay for qualified medical expenses. These accounts are designed to help those with high-deductible health plans manage healthcare costs by providing a triple tax benefit: contributions are tax-deductible, earnings grow tax-free, and withdrawals for eligible medical expenses are also tax-free. HSAs serve as a financial tool that can accumulate funds over time.

Understanding Qualified Medical Expenses

A “qualified medical expense” refers to costs for diagnosis, cure, mitigation, treatment, or prevention of disease. These expenses must be primarily for medical care, not merely beneficial to general health. The Internal Revenue Service (IRS) provides comprehensive guidance on what constitutes a qualified medical expense in IRS Publication 502, titled “Medical and Dental Expenses,” which details eligible expenses for tax-free withdrawals.

Common examples of qualified medical expenses include doctor visits, prescription medications, hospital stays, and dental care. IRS Publication 502 is the authoritative source for determining eligibility.

IVF Procedure and Related Expenses

In Vitro Fertilization (IVF) is generally considered a qualified medical expense for HSA purposes. The IRS recognizes IVF expenses as eligible for tax-free reimbursement, as IVF treats infertility.

IVF components and services are typically covered by an HSA. These include the IVF procedure itself, fertility medications, and necessary laboratory fees. Diagnostic tests and fertility specialist consultations are also eligible.

For an expense to qualify, it must be medically necessary and performed on the account holder, their spouse, or an eligible dependent. Expenses for egg donor fees are also covered if medically necessary. However, neither HSA nor FSA funds cover surrogate mother expenses or long-term storage of eggs or embryos.

Accessing Your HSA Funds

Using HSA funds for qualified medical expenses like IVF involves several practical methods. One common approach is using an HSA-linked debit card directly at the healthcare provider’s office or pharmacy. This method offers immediate payment from the account.

Another option is to pay for expenses out-of-pocket and then reimburse oneself from the HSA. This reimbursement can occur at any time, provided the HSA was established before the expense. Some HSA providers also offer online bill pay services for direct payments to healthcare providers. All documentation should be retained, regardless of payment method.

Documentation for Tax Purposes

Maintaining thorough records for all HSA-funded medical expenses, including IVF, is important for compliance with IRS rules. While you do not typically submit receipts with your tax return, you are responsible for proving that withdrawals were for qualified medical expenses if your tax return is audited.

Essential documentation includes detailed receipts and invoices from fertility clinics. Explanation of Benefits (EOB) statements from insurance providers are also important. Prescription records for fertility medications and documentation from your doctor are also necessary. These records should be retained for at least seven years, as the IRS can audit tax returns for this period.