Can I Use My HSA for Urgent Care Visits?

A Health Savings Account (HSA) is a tax-advantaged savings account for healthcare expenses. It is typically available to individuals with a High-Deductible Health Plan (HDHP), allowing them to save and pay for qualified medical costs with pre-tax dollars. HSAs offer a portable and flexible option for managing healthcare expenditures.

Understanding HSA-Eligible Medical Expenses

The Internal Revenue Service (IRS) defines “qualified medical expenses” for HSA purposes, primarily in IRS Publication 502, “Medical and Dental Expenses.” These expenses are generally those paid for the diagnosis, cure, mitigation, treatment, or prevention of disease, or for affecting any structure or function of the body.

Common HSA-eligible expenses include routine doctor visits, specialist consultations, and prescription medications. Diagnostic services, such as lab tests and imaging, along with necessary medical equipment and supplies, also qualify. Dental care, including cleanings, fillings, and braces, as well as vision care like eye exams, glasses, and contact lenses, are typically covered.

The scope of eligible expenses also extends to chiropractic care, acupuncture, and mental health services, including psychiatric care and psychological counseling. Urgent care visits, which address immediate but non-life-threatening medical conditions, are explicitly recognized as eligible expenses. Since 2020, over-the-counter medications and menstrual care products without a prescription have also been added to this list.

Using Your HSA for Urgent Care Visits

Utilizing HSA funds for urgent care is a straightforward process. Many HSA administrators provide a debit card linked directly to the account, allowing for immediate payment at the time of service. This method simplifies transactions by directly drawing funds from your HSA balance.

Alternatively, you can pay for the urgent care visit out-of-pocket using personal funds, such as a credit card or cash. After payment, you can then seek reimbursement from your HSA. This involves submitting a claim to your HSA administrator, along with necessary documentation, to transfer funds from your HSA to your personal bank account. The flexibility to reimburse yourself later means you do not need sufficient funds in your HSA at the exact moment of service, provided the HSA was established before the expense was incurred.

Regardless of the payment method, confirm that the urgent care services received fall under the IRS definition of qualified medical expenses. While urgent care visits are generally eligible, retain all receipts and statements for verification. This ensures all transactions are properly accounted for.

Maintaining Records for Your HSA

Proper record-keeping is an important responsibility for HSA holders for tax compliance. The IRS requires account holders to maintain sufficient records to demonstrate that all HSA distributions were used exclusively for qualified medical expenses. These records are important in the event of an IRS audit, preventing potential penalties.

The types of documentation to retain include detailed receipts for all services and products paid for with HSA funds. Explanation of Benefits (EOB) statements from your health insurance provider, which detail the services received and amounts covered or applied to your deductible, are also important. Additionally, keep all statements from your HSA provider, outlining contributions, distributions, and account balances.

Keep these records for at least three years after the tax return was filed for the year the expense was incurred or reimbursed, as this is the typical IRS audit period. Some financial professionals suggest retaining records for up to seven years. Failing to provide proof that a distribution was for a qualified medical expense can result in the distributed amount being taxed as ordinary income, along with a potential 20% penalty if you are under age 65.