Can You Buy Food With an HSA Card?

Health Savings Accounts (HSAs) are tax-advantaged savings accounts for qualified medical expenses. They offer a triple tax advantage: contributions are tax-deductible, funds grow tax-free, and withdrawals for eligible expenses are also tax-free. A common question involves using an HSA card for food, which typically falls outside qualified medical expenses. Understanding specific guidelines is important for proper use of these funds.

Understanding HSA Eligibility

To be eligible for HSA funds, an expense must qualify as “medical care” under Internal Revenue Code (IRC) Section 213(d). This includes amounts paid for diagnosing, treating, or preventing disease, or affecting body function. Expenses must primarily alleviate a physical or mental defect or illness, not merely benefit general health. Common qualified medical expenses include doctor visits, prescription medications, hospital stays, and dental or vision care.

The IRS provides guidance on qualified medical expenses, notably in Publication 502. The eligibility of items like over-the-counter medications and certain menstrual care products has been expanded. However, general living expenses, even those contributing to overall wellness, typically do not qualify. This principle guides all HSA purchases.

When Food Qualifies as a Medical Expense

Everyday groceries are not qualified medical expenses and cannot be purchased with an HSA card. Using HSA funds for them incurs income tax and a potential 20% penalty if the account holder is under 65. However, limited circumstances allow certain food items to qualify.

Food can be eligible if specifically formulated and medically necessary to treat a diagnosed medical condition, known as “medical foods.” Examples include specialized dietary products for severe allergies, nutritional formulas for metabolic disorders, or gluten-free foods for celiac disease. Such food must serve a medical purpose beyond ordinary nutritional needs. Only the excess cost, beyond a normal diet, is typically eligible.

Weight-loss programs are HSA-eligible only if for a physician-diagnosed disease like obesity, diabetes, hypertension, or heart disease. General weight-loss for appearance or overall well-being does not qualify. Nutritional supplements are generally ineligible unless a medical practitioner recommends them for a specific diagnosed medical condition. Supplements for general wellness are usually not covered.

Required Documentation for Food Purchases

Substantiating HSA-eligible food purchases requires specific documentation for potential IRS audits. A Letter of Medical Necessity (LMN) from a licensed healthcare provider is required. This letter must specify the medical condition, explain why specific food items or dietary programs are necessary for treatment, and indicate the duration of necessity.

Detailed, itemized receipts are also necessary. These must clearly show the specific food items purchased, their cost, and date. For special foods, track the additional cost compared to conventional items. Maintaining organized records of all purchases and LMNs is important for demonstrating eligibility and avoiding taxes and penalties.

How to Use Your HSA Card for Food

Using an HSA card for eligible food purchases involves specific steps. Some merchants, like pharmacies and grocery stores, use an Inventory Information Approval System (IIAS) at their point of sale. This system automatically identifies eligible healthcare products, including medical foods, separating them from ineligible items during a transaction.

If a merchant’s system categorizes eligible items, the HSA card may be used directly. If the system cannot verify eligibility, or if the purchase includes non-eligible items, the transaction may be declined. In such cases, or for items that do not auto-substantiate, pay for eligible items out-of-pocket. Account holders can then reimburse themselves from their HSA by submitting detailed receipts and any required Letter of Medical Necessity to their HSA administrator. There is no deadline for reimbursing oneself for qualified medical expenses incurred after the HSA was established, provided proper records are kept.