Can You Use an HSA to Pay for a Gym Membership?

A Health Savings Account (HSA) is a specialized savings and spending account designed to help individuals manage healthcare costs. It offers tax advantages, allowing contributions to be made on a pre-tax basis, funds to grow tax-free, and withdrawals for qualified medical expenses to be tax-free. To be eligible for an HSA, an individual must be covered by a high-deductible health plan (HDHP).

General Principles of HSA-Qualified Medical Expenses

The Internal Revenue Service (IRS) defines “qualified medical expenses” for HSA purposes. These expenses are broadly defined as costs primarily incurred for the diagnosis, cure, mitigation, treatment, or prevention of disease, or for the purpose of affecting any structure or function of the body. This definition typically includes a wide range of services and products, such as payments for medical, dental, and vision care, prescription medications, and certain medical equipment.

Expenses must be directly related to alleviating or preventing a physical or mental disability or illness. Costs for general health benefits, like vitamins or a vacation, do not qualify. The IRS publishes guidance, including Publication 502, “Medical and Dental Expenses,” which lists common eligible expenses.

Specific Conditions for Gym Membership Eligibility

A gym membership is generally not a qualified medical expense under IRS rules. This is because fitness activities and gym memberships are often viewed as personal or recreational expenses aimed at improving general health, rather than addressing a specific medical condition. Using HSA funds for general wellness expenses could lead to taxes and penalties if not properly justified.

An exception exists if a gym membership is medically necessary and prescribed by a doctor for a specific diagnosed disease or condition. For instance, a gym membership might be eligible if a doctor prescribes regular exercise as part of a treatment plan for conditions such as obesity, heart disease, diabetes, or for post-surgery rehabilitation. The prescription must clearly indicate how the gym access supports the treatment or affects a specific structure or function of the body, rather than just being for overall wellness.

Substantiating HSA Expenses

Account holders are responsible for substantiating that distributions from their HSA are used exclusively for qualified medical expenses. While HSA administrators may not always require submission of receipts for every transaction, the burden of proof rests with the individual in the event of an IRS inquiry or audit. Meticulous record-keeping is necessary to demonstrate compliance with tax regulations.

For expenses that fall under specific conditions, like gym memberships, documentation must include a doctor’s prescription or a Letter of Medical Necessity (LMN). The letter should explicitly detail the medical condition and how the gym membership is an integral part of the treatment plan. All receipts for gym membership payments and other supporting documentation, such as Explanation of Benefits (EOB) from an insurance company, should be retained. It is advisable to keep these records for at least three years from the date the tax return was filed, or longer if the expense is reimbursed years after it was incurred.