Can You Buy Eye Drops With an HSA?

Health Savings Accounts (HSAs) offer a tax-advantaged way for individuals to save and pay for qualified medical expenses. These accounts are designed to help cover healthcare costs that are not reimbursed by health insurance plans. Understanding what constitutes an eligible expense is important for effectively utilizing an HSA, including purchases like eye drops.

General Eligibility for Eye Drops

For an expense to be eligible for HSA reimbursement, it must primarily be for the diagnosis, cure, mitigation, treatment, or prevention of disease, or for treatments affecting any part or function of the body. This foundational rule, outlined in IRS Publication 502, dictates the medical necessity of the expense. Prior to January 1, 2020, over-the-counter (OTC) medications generally required a doctor’s prescription to be HSA-eligible. The Coronavirus Aid, Relief, and Economic Security (CARES) Act changed this requirement, making OTC medications, including eye drops, eligible for HSA reimbursement without a prescription. For some “dual-purpose” items that serve both medical and general personal purposes, a Letter of Medical Necessity (LMN) from a healthcare provider may still be required to prove medical necessity.

Specific Eye Drop Types and Coverage

Most eye drops are considered eligible for HSA reimbursement, especially those used to alleviate symptoms like eye dryness, irritation, burning, stinging, or blurry vision. This includes medicated eye drops prescribed for conditions such as glaucoma or infections, as well as artificial tears used for dry eye relief. Products specifically marketed to treat medical conditions typically meet the criteria for HSA eligibility.

However, eye drops primarily intended for cosmetic purposes, such as those solely designed to enhance appearance or remove redness without a therapeutic medical benefit, are typically not eligible. The expense must be aimed at alleviating or preventing a physical or mental defect or illness, not merely for general well-being. Products without a specific medical diagnosis or condition generally fall outside the scope of eligible expenses.

Purchasing Eye Drops with HSA Funds

Using HSA funds for eligible eye drop purchases can be done in a few ways. Many HSA providers issue a debit card, which allows for direct payment at the point of sale, similar to a regular debit card. This method offers immediate access to the funds for qualified medical expenses.

Alternatively, individuals can pay for eye drops out-of-pocket using personal funds and then reimburse themselves from their HSA. There is no time limit for requesting these reimbursements, provided the HSA was established before the expense was incurred. It is important to maintain detailed records, including itemized receipts, to substantiate all HSA expenditures. These records should be retained for as long as the income tax return is subject to audit, typically three years, or as long as the account is maintained, whichever is longer. Failure to provide proper documentation for non-qualified expenses can result in the amount being taxed as income, plus a potential 20% penalty if the account holder is under 65.