Can You Buy Plan B With Your Health Savings Account?
Understand how your Health Savings Account can be used for over-the-counter health products and the necessary steps to ensure your purchase is eligible.
Health Savings Accounts (HSAs) offer a tax-advantaged way for individuals with high-deductible health plans to pay for medical costs. These accounts allow you to set aside money on a pre-tax basis to cover a wide range of healthcare-related purchases. Contributions lower your taxable income for the year, the funds grow tax-free, and withdrawals are also tax-free when used for appropriate expenses.
Defining Qualified Medical Expenses
The Internal Revenue Service (IRS) defines items that can be paid for with HSA funds as “qualified medical expenses,” detailed in IRS Publication 502. An expense is eligible if its primary purpose is to alleviate or prevent a physical or mental illness. If you use HSA funds for a non-qualified expense, the amount is included in your gross income and is subject to income tax. For those under age 65, an additional 20% penalty also applies.
The Coronavirus Aid, Relief, and Economic Security (CARES) Act expanded the definition of qualified medical expenses to include over-the-counter (OTC) medicines without a prescription. This legislation reversed a previous restriction, making many new items eligible. Under these updated federal guidelines, emergency contraceptives, such as Plan B and its generic equivalents, are a qualified medical expense and are eligible for purchase with HSA funds.
Required Documentation for HSA Purchases
The IRS requires that you maintain records for all distributions from your HSA to prove they were used for qualified medical expenses. This documentation is your responsibility to keep, not your employer’s or HSA administrator’s. These records are necessary whether you use an HSA debit card for a direct payment or pay out-of-pocket and seek reimbursement later. In the event of an IRS audit, you must be able to produce these records.
A proper receipt or invoice must contain specific information, including the name of the product or service, the date of the transaction, and the cost. A credit card slip showing only the date and total amount is insufficient because it does not detail what was purchased. It is recommended to keep these records for at least three years from the date you file your tax return.
How to Use HSA Funds for Plan B
You have two primary methods for using HSA funds to purchase Plan B or a similar emergency contraceptive. The most direct way is to use an HSA-linked debit card at the point of sale. This card is provided by the financial institution that administers your account and can be used at pharmacies, supermarkets, and online retailers just like a regular debit card, with funds withdrawn directly from your HSA balance.
The second method is to pay for the item with personal funds and then request a reimbursement from your HSA. This requires submitting a claim to your HSA provider, which is often done by logging into your account on the provider’s online portal. You will need to upload a copy of the itemized receipt, and once approved, the funds can be transferred to your personal bank account or sent via check.
Related Over-the-Counter Purchases
The CARES Act’s expansion of qualified medical expenses to include non-prescription OTC products means many other items are also eligible for HSA purchase. Other qualified medical expenses include:
- Pregnancy tests, which are considered a diagnostic item
- Condoms, for the prevention of disease
- Pain relievers, such as aspirin or ibuprofen
- Feminine hygiene products like tampons and pads
Standard birth control pills are also qualified medical expenses, though they require a prescription.