Can I Use My HSA for Contact Lenses?

Health Savings Accounts (HSAs) offer a tax-advantaged way to save and spend on healthcare expenses. These accounts provide flexibility for managing medical costs, offering a valuable resource for individuals enrolled in a high-deductible health plan. Contributions to an HSA are typically tax-deductible, the funds grow tax-free, and qualified withdrawals are also tax-free, creating a triple tax benefit for users.

HSA Eligibility for Vision Expenses

Contact lenses are considered a qualified medical expense for Health Savings Account (HSA) purposes. They are eligible because they are prescribed to correct vision, addressing a medical need under Internal Revenue Service (IRS) guidelines. IRS Publication 502 outlines that medical expenses include costs for the diagnosis, cure, mitigation, treatment, or prevention of disease, and treatments affecting any body function. This broad definition encompasses vision correction.

Beyond contact lenses, a range of other vision-related products and services are also typically HSA-eligible. These include comprehensive eye exams, prescription eyeglasses, and corrective eye surgeries, such as LASIK. Accessories like contact lens solutions and cleaners are also covered, as they are essential for the proper use and maintenance of the lenses.

Using Your HSA for Contacts

Utilizing your HSA for contact lens purchases offers straightforward payment options. Many individuals choose to use an HSA-specific debit card directly at the point of sale, whether purchasing contacts online or at a retail store. This method allows for immediate payment, with funds directly deducted from the HSA.

Alternatively, you can pay for contact lenses out-of-pocket using personal funds and then reimburse yourself from your HSA. This process typically involves logging into your HSA provider’s online portal, submitting details of the expense, and requesting a transfer to your linked bank account. There is no time limit for when you must reimburse yourself, as long as the HSA was already established at the time the expense was incurred and the expense was not reimbursed by another source.

Documentation and Record Keeping

Maintaining thorough records for all HSA-funded expenses, including contact lens purchases, is important. These records serve as proof of qualified medical expenses, which is necessary for tax purposes and in the event of an IRS audit. Should the IRS question the eligibility of a distribution, failure to provide adequate documentation can result in the distributed amount being subject to income tax and a potential 20% penalty.

It is advisable to retain itemized receipts and, if applicable, Explanation of Benefits (EOB) statements from your vision insurance or provider. These documents should clearly detail the service or product, the date of purchase, and the amount paid. While there is no strict federal mandate on how long to keep records, it is generally recommended to keep them for at least three years from the tax filing date, or as long as you maintain the HSA, to align with typical IRS audit periods.