Can You Buy Toothpaste With an HSA?
Navigate the complexities of HSA eligibility for common health items. Understand what qualifies and how to effectively utilize your funds.
A Health Savings Account (HSA) is a tax-advantaged savings account designed to help individuals save for qualified medical expenses. This type of account is typically available to those enrolled in a high-deductible health plan (HDHP). Contributions to an HSA are generally tax-deductible, and funds can grow tax-free. Withdrawals are also tax-free when used for eligible medical expenses, offering a triple tax advantage.
Understanding HSA Eligibility for Over-the-Counter Products
The Internal Revenue Service (IRS) defines a “qualified medical expense” as amounts paid for the diagnosis, cure, mitigation, treatment, or prevention of disease, or for treatments affecting any part or function of the body. These expenses must primarily serve to alleviate a physical or mental defect or illness. Previously, over-the-counter (OTC) medicines and drugs required a prescription to be considered HSA eligible.
A significant change occurred with the passage of the CARES Act in March 2020, which removed the prescription requirement for most OTC drugs and medicines. This legislative change made a wide range of common OTC medications, such as pain relievers, allergy medicine, and cold and flu products, eligible for HSA reimbursement. However, this expanded eligibility still maintains the core principle that the expense must be for medical care, distinguishing medical items from general health or cosmetic products.
HSA Eligibility for Oral Hygiene Products
Regular toothpaste is generally not considered an HSA-eligible expense because it is viewed as a general hygiene product for maintaining overall health, not primarily for treating a specific medical condition. Similarly, everyday dental items like toothbrushes and dental floss are typically excluded for the same reason. This distinction holds true even with the expanded eligibility for other over-the-counter products.
However, certain specialized oral care products may qualify if they are used to treat a specific medical condition or are prescribed by a healthcare provider. For instance, medicated mouth rinses or specialized fluoride treatments for diagnosed conditions, such as gingivitis or severe tooth sensitivity, might be eligible. Dental expenses such as X-rays, cleanings, fillings, sealants, braces, and dentures are typically HSA-eligible as they directly relate to medical care.
Documentation and Purchase Considerations for HSA Funds
Once an item’s HSA eligibility has been determined, there are practical steps for using and managing your funds. Many HSA providers offer a dedicated debit card, allowing for direct payment at the point of sale for eligible expenses. Alternatively, you can pay for qualified medical expenses out-of-pocket and then reimburse yourself from your HSA. This reimbursement can occur at any time, even years after the expense was incurred, provided the expense was incurred after the HSA was established.
Retaining detailed records is an important responsibility for HSA accountholders. You should keep itemized receipts that clearly show the product purchased, the amount paid, and the date of the transaction. These records are necessary in case of an IRS audit, as you are responsible for proving that withdrawals were for qualified medical expenses. Failure to provide proper documentation for non-eligible withdrawals can result in the amount being taxed and a 20% penalty. For highly specific or dual-purpose items, a Letter of Medical Necessity (LOMN) from a licensed healthcare provider may be required to certify the medical necessity of the expense.