Can I Use My HSA for a Naturopath?

Using a Health Savings Account (HSA) for naturopathic services is possible if you follow specific Internal Revenue Service (IRS) rules. An HSA is a tax-advantaged account that allows you to set aside pre-tax money for qualified medical costs. Naturopathic medicine is a distinct system of primary health care that emphasizes prevention and the self-healing process through the use of natural therapies. While some naturopathic services can be paid for with HSA funds, it is not automatic and depends on meeting specific criteria.

Determining Eligibility of Naturopathic Services

Using HSA funds for naturopathic care depends on the service meeting the IRS definition of a “qualified medical expense.” According to IRS Publication 502, this is an expense for the diagnosis, cure, treatment, or prevention of a specific disease. The service must target a particular physical or mental condition, as expenses for general well-being do not qualify.

For a naturopathic treatment to be eligible, it must be directly linked to a documented medical problem. For example, if a licensed naturopath recommends specific herbal supplements or acupuncture to treat a diagnosed condition like chronic migraines, the cost would likely qualify. The expense must be primarily for alleviating or preventing that specific ailment.

Conversely, using your HSA for treatments intended only to support general wellness is not permitted. This includes purchasing vitamins to boost overall energy or undergoing a detoxification program without a specific diagnosis. Even if recommended by a naturopath, if the primary purpose is general health maintenance, the expense is not considered qualified by the IRS.

Required Documentation for Reimbursement

To substantiate the use of HSA funds for many naturopathic services, a Letter of Medical Necessity (LMN) is often required. This document verifies that a treatment is necessary to address a specific medical condition. It must be written by a licensed healthcare provider, but you should check with your HSA administrator to ensure they recognize your naturopath as a licensed provider for reimbursement purposes. For alternative treatments, the LMN is the primary evidence that justifies the expenditure to your HSA administrator and the IRS.

An LMN must contain specific information to be valid, as a vague letter will likely be rejected. A complete LMN includes the following:

• The patient’s name
• A detailed description of the diagnosed medical condition
• The specific treatment being recommended
• A clear statement that the treatment is medically necessary
• The licensed provider’s signature and the date

You must also obtain and keep detailed, itemized receipts from the practitioner that correspond to the services in the LMN. A simple credit card slip is not sufficient. The receipt must show the date, a description of the service provided, and the cost.

Paying for Services and Recordkeeping

You can pay for naturopathic care using your HSA debit card at the provider’s office. Alternatively, you can pay out-of-pocket and request a tax-free reimbursement from your HSA administrator. You will need to submit the required documentation when seeking reimbursement.

You are responsible for meticulous recordkeeping. You must retain all supporting documents, including the LMN, itemized receipts, and any Explanation of Benefits (EOB) from your insurance carrier. While the IRS generally has three years to audit a tax return, this period can be extended in cases of substantial income understatement. Therefore, it is wise to keep all HSA-related documents for as long as the account is open.

Using HSA funds for a non-qualified expense has financial consequences. The amount used will be considered taxable income. If you are under age 65, the distribution is also subject to an additional 20% tax penalty.