Can You Use an HSA for Allergy Medicine?

A Health Savings Account (HSA) offers a tax-advantaged way for individuals to manage healthcare costs while enrolled in a high-deductible health plan (HDHP). Contributions to an HSA are tax-deductible. Funds within the account grow tax-free, and withdrawals for qualified medical expenses are also exempt from federal income tax. This triple tax advantage positions HSAs as a valuable tool for both immediate healthcare needs and long-term savings.

Qualified Medical Expenses and HSAs

The Internal Revenue Service (IRS) defines what constitutes a “qualified medical expense” for HSA purposes, as outlined in Internal Revenue Code Section 213(d). These guidelines cover amounts paid for the diagnosis, cure, mitigation, treatment, or prevention of disease, as well as expenses affecting any part or function of the body.

For an expense to qualify, it must be primarily for the alleviation of a physical or mental defect or illness. Expenses for general health improvement, such as vitamins or a vacation, are not considered qualified unless deemed medically necessary for a specific condition. Cosmetic procedures are excluded unless they are necessary to correct a deformity resulting from a congenital abnormality, personal injury, or disfiguring disease.

Allergy Medicine Eligibility

Both prescription and over-the-counter (OTC) allergy medicines are qualified medical expenses for HSA reimbursement. The 2020 Coronavirus Aid, Relief, and Economic Security (CARES) Act permanently removed the requirement for a doctor’s prescription for OTC medications, making them directly reimbursable with HSA funds.

This change means common allergy medications such as oral antihistamines, nasal sprays, decongestants, and allergy eye drops can now be purchased using HSA funds without needing a doctor’s note. The medicine must be used to treat a specific medical condition, like allergies, rather than for general wellness. This expanded eligibility provides greater flexibility for individuals managing their allergy symptoms.

Using Your HSA and Record Keeping

There are two primary methods for using HSA funds for eligible expenses: direct payment or reimbursement. You can use an HSA-linked debit card at the point of sale, such as at a pharmacy or doctor’s office, or pay providers directly online through your HSA portal. This method is convenient for immediate healthcare costs.

Alternatively, you can pay for qualified medical expenses out-of-pocket and then reimburse yourself from your HSA later. This reimbursement can occur at any time, even years after the expense was incurred, provided the HSA was established before the expense date. This strategy allows funds in your HSA to continue growing tax-free through investments.

Maintaining thorough records is important for all HSA expenditures, especially for potential IRS audits. You should keep receipts, Explanation of Benefits (EOB) statements from your insurance provider, and any other documentation that proves the expense was qualified and was not reimbursed from another source or claimed as an itemized tax deduction. These records should be retained for as long as your tax return is subject to audit, three to seven years, or as long as you maintain the HSA account, whichever period is longer.