Can I Use My HSA to Pay for Life Coaching?

Health Savings Accounts (HSAs) offer a tax-advantaged way to save and pay for eligible healthcare expenses. Questions often arise regarding the eligibility of non-traditional services, such as life coaching, for HSA reimbursement.

Understanding HSA Qualified Medical Expenses

The Internal Revenue Service (IRS) defines a “qualified medical expense” as costs incurred primarily for the diagnosis, cure, mitigation, treatment, or prevention of disease, or for affecting any structure or function of the body. This definition is found in IRS Publication 502.

Common examples of eligible expenses include doctor’s visits, prescription medications, hospital stays, and dental care. Expenses merely beneficial to general health, such as vitamins or a vacation, are not considered qualified medical expenses. The expense must be directly related to a medical condition rather than general wellness.

When Life Coaching Qualifies for HSA Use

General life coaching, which focuses on self-improvement, career development, or overall wellness without a specific medical purpose, is not considered an HSA-eligible expense. Coaching aimed solely at enhancing personal growth or general well-being does not meet the medical care criterion.

Life coaching can qualify for HSA reimbursement under specific circumstances. This requires a medical diagnosis from a licensed healthcare professional, such as a physician, psychiatrist, or psychologist. The coaching must be prescribed as an integral part of treating a specific diagnosed medical condition, such as anxiety, depression, chronic disease, or addiction recovery. For example, coaching might be eligible if prescribed to manage stress related to a diagnosed heart condition or as behavioral support for a diagnosed eating disorder. A written prescription or a “Letter of Medical Necessity” from the healthcare provider is essential to establish this medical connection.

Documenting and Reimbursing HSA Expenses

If life coaching meets the eligibility criteria, record-keeping is crucial for reimbursement. Account holders should obtain a Letter of Medical Necessity from their licensed healthcare provider. This letter must clearly state the specific diagnosed medical condition, describe how the life coaching treats or prevents this condition, and specify the duration of the recommended treatment.

In addition to the Letter of Medical Necessity, retain detailed receipts from the life coach. These receipts should include the dates of service, a clear description of services rendered, and costs incurred. Other relevant medical records supporting the diagnosis and necessity of the coaching should also be kept. While an HSA custodian may not require these documents for a reimbursement claim, the burden of proof for eligibility rests with the account holder in the event of an IRS audit. Receipts and documentation should be saved for as long as the tax return is open to audit, which is three years, or potentially longer if the HSA remains open.