Can You Buy Lotion With an HSA?

A Health Savings Account (HSA) offers a tax-advantaged way to save and pay for qualified healthcare expenses. Understanding specific Internal Revenue Service (IRS) guidelines is important for maximizing HSA benefits and navigating eligible medical expenses.

Understanding HSA Eligibility for Medical Expenses

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 affecting any structure or function of the body. This definition, outlined in IRS Publication 502, distinguishes medical care from general health or cosmetic purposes. Medical necessity is a principle, meaning the expense must address a specific medical condition, not simply promote general well-being or enhance appearance.

For items not inherently medical, such as certain over-the-counter products, a doctor’s prescription or a Letter of Medical Necessity (LOMN) can establish eligibility. An LOMN is a document from a licensed healthcare provider explaining why a product or treatment is essential for a specific health condition, providing justification for medical care.

Specifics for Lotion Purchases

Most general moisturizing lotions, body lotions, hand creams, or anti-aging creams used for cosmetic purposes or routine skin hydration are not eligible for HSA reimbursement. The IRS considers these products personal care items because they do not meet the criteria of treating a specific medical condition.

However, certain types of lotions and skincare products may qualify for HSA funds. Lotions specifically formulated and marketed for treating diagnosed medical conditions, such as eczema, psoriasis, or severe acne, are eligible. These products contain active medicinal ingredients and are prescribed or recommended by a healthcare provider for therapeutic use. For instance, prescription-strength anti-itch creams or medicated barrier creams for a skin disorder could be included.

Sunscreen is eligible if it has an SPF of 15 or higher and offers broad-spectrum protection, as it helps prevent skin cancer and sunburn. The IRS allows over-the-counter medications and drugs, including sunscreen, to be HSA-eligible without a prescription following the CARES Act of 2020. Differentiating between a product used for medical prevention and one for cosmetic tanning is crucial for eligibility.

Substantiating and Reimbursing Your Purchase

Maintaining records is important for substantiating eligible HSA purchases. You should keep detailed receipts that clearly show the product name, the date of purchase, and the amount paid. If the lotion required a prescription or a Letter of Medical Necessity (LOMN), retaining a copy of that document is essential.

To get reimbursed, you typically submit a claim to your HSA administrator, which can be done through an online portal, mobile application, or by mail. Many HSA providers also offer a debit card, allowing for direct payment at the time of purchase for eligible items. These records are important for reimbursement and for substantiating the expense in an IRS audit. It is the account holder’s responsibility to ensure that all withdrawals are for qualified medical expenses.