Can I Use My HSA for My Child’s Braces?

A Health Savings Account (HSA) is a tax-advantaged savings account designed to help individuals save for healthcare expenses. These accounts offer a triple tax benefit: contributions are tax-deductible, earnings grow tax-free, and withdrawals for qualified medical expenses are also tax-free. HSAs provide a flexible way to manage out-of-pocket medical costs and can even serve as a savings vehicle for future healthcare needs, particularly in retirement. They are available to individuals enrolled in a high-deductible health plan (HDHP).

Understanding Qualified Medical Expenses

A “qualified medical expense” refers to costs for medical care that are generally deductible for income tax purposes. These expenses are defined by the Internal Revenue Service (IRS) and must be primarily to alleviate or prevent a physical or mental disability or illness. Common examples include payments to doctors, dentists, and other medical professionals, as well as costs for prescription drugs, hospital services, and certain medical equipment.

The IRS provides guidance on what constitutes a qualified medical expense for yourself, your spouse, and your dependents. Medical expenses must be for diagnosis, cure, mitigation, treatment, or prevention of disease.

Using Your HSA for a Dependent Child’s Braces

You can use your HSA to pay for a dependent child’s braces, as orthodontic services are considered qualified medical expenses. The IRS defines medical expenses as costs for the diagnosis, cure, mitigation, treatment, or prevention of disease, or for affecting any structure or function of the body. Orthodontic treatments, including braces, fall under this definition when they address medical issues like jaw misalignment, bite problems, or other oral health concerns, rather than purely cosmetic reasons.

For a child’s orthodontic expenses to be covered by your HSA, the child must meet the IRS criteria for a dependent. A person is considered your dependent for HSA purposes if they are a qualifying child or a qualifying relative, and they were your dependent either when the medical services were provided or when you paid the expenses. For a qualifying child, this means they are under age 19 (or under 24 if a full-time student), live with you for more than half the year, and do not provide more than half of their own support. HSA dependent rules are based on tax status, which can differ from how dependents are defined for health insurance coverage.

Documentation and Reimbursement Procedures

You can use an HSA-linked debit card directly at the time of service, or you can pay for the expense out-of-pocket and then reimburse yourself from your HSA later. Many HSA providers offer online platforms or mobile apps to facilitate these reimbursements, allowing you to transfer funds from your HSA to your linked bank account. There is no time limit for reimbursement, meaning you can pay for an expense today and reimburse yourself years later, provided the expense was incurred after your HSA was established.

Thorough records are important for all HSA distributions. Keep receipts, invoices, and Explanation of Benefits (EOB) statements that clearly show the date of service, the nature of the service (e.g., orthodontic treatment), the amount paid, and the recipient of the service. These records are for your own protection in case of an IRS audit, as you may need to prove that distributions were for qualified medical expenses. Without proper documentation, amounts withdrawn for non-qualified expenses are subject to income tax and may incur an additional 20% penalty.