Can I Use My HSA for Service Dog Expenses?

Health Savings Accounts (HSAs) offer a tax-advantaged way to save and pay for qualified medical expenses. Paired with high-deductible health plans, HSAs allow pre-tax contributions that grow and can be withdrawn tax-free for eligible healthcare costs. Understanding Internal Revenue Service (IRS) guidelines is key for using HSA funds for service animal expenses.

Understanding What Qualifies

For an expense to be HSA-eligible, it must fall under the IRS definition of “medical care,” outlined in IRS Publication 502. A service animal meets this definition if its primary purpose is to alleviate or prevent a physical or mental disability or illness for the account holder, their spouse, or a dependent. The IRS considers expenses for a guide dog or other service animal to be qualified medical expenses when the animal assists a visually impaired, hearing-impaired, or other physically or mentally disabled person.

This “primary purpose” test distinguishes a qualified service animal from an emotional support animal (ESA) or a general pet. Expenses for emotional support animals are generally not HSA-eligible because their role is typically companionship or general emotional comfort, which the IRS does not consider direct medical care. Their costs, including veterinary care and supplies, are not recognized as qualified medical expenses for HSA purposes.

Specific Allowable Expenses

Once a service animal meets the IRS’s “primary purpose” test, various associated costs can be paid for using HSA funds. These eligible expenses include the initial cost of acquiring the service animal. The costs associated with training the animal to perform specific tasks directly related to the medical condition are also eligible. This covers specialized training to assist with tasks such as guiding the blind, alerting the deaf, providing medication reminders, or assisting during seizures.

Ongoing maintenance expenses are also covered, provided they are essential for the animal to perform its medical service duties. This includes the cost of food, grooming, and veterinary care, such as medical treatments, vaccinations, and routine check-ups. These expenses are eligible because they maintain the animal’s health and vitality, ensuring it can continue to perform its medically necessary functions.

Essential Documentation and Record Keeping

Account holders must maintain thorough documentation to substantiate the eligibility of service animal expenses. A Letter of Medical Necessity (LMN) from a qualified healthcare professional, such as a doctor or psychiatrist, is typically required. This letter should clearly state the specific medical condition and explain how the service animal is necessary for its treatment, alleviation, or prevention.

Account holders must also keep detailed records of all expenses paid with HSA funds. This includes receipts for all purchases and services related to the service animal, such as acquisition costs, training fees, food, and veterinary bills. These records are not typically submitted to the HSA administrator for every transaction but must be retained for tax purposes and in case of an IRS audit. Failure to provide proper documentation for qualified medical expenses can result in a 20% penalty on the distributions, in addition to income tax.

What is Not Covered

It is important to understand which animal-related expenses are not HSA-eligible. Expenses for emotional support animals (ESAs) or general pets whose primary purpose is companionship are not covered, as they do not meet the IRS definition of medical care. The IRS explicitly states that funds cannot be used for veterinary bills or any pet-related medical expenses for animals that are not qualified service animals. This includes routine veterinary care for household pets, such as annual check-ups or vaccinations, if the animal is not a service animal.

Furthermore, expenses for personal enjoyment or convenience that are not directly related to the service animal’s medical tasks are ineligible. This means costs for items like general pet toys, non-medical boarding, or routine walks that are not part of a specific medical service are not covered.