Can You Use an HSA to Pay for Contact Lenses?

A Health Savings Account (HSA) provides a tax-advantaged way to save for future medical expenses. These accounts work with specific health insurance plans, allowing holders to pay for a wide range of qualified medical services and products.

Understanding Health Savings Accounts

An HSA is a savings account specifically for healthcare expenses, available to individuals enrolled in a High-Deductible Health Plan (HDHP). To be eligible for an HSA, an individual must have an HDHP, generally meaning their health insurance plan has a higher deductible than traditional plans. Contributions to an HSA can be made on a pre-tax basis through payroll deductions, or they can be tax-deductible if made directly by the individual.

Funds within an HSA grow tax-free. Withdrawals from an HSA are also tax-free, provided they are used for qualified medical expenses. Unlike some other health savings vehicles, HSA funds roll over from year to year and remain with the account holder even if they change employers or retire.

General Rules for Eligible Medical Expenses

The Internal Revenue Service (IRS) defines what constitutes an “eligible medical expense” for HSA purposes. Generally, these are costs incurred primarily for the prevention or alleviation of a physical or mental defect or illness, or for medical care. For example, eligible expenses typically include doctor visits, prescription medications, and hospital services.

It is important that expenses are not reimbursed by other sources, such as a health insurance plan, to qualify for HSA use.

Covering Contact Lenses and Related Costs

Contact lenses are considered an eligible medical expense for HSA use. This includes prescription contact lenses for vision correction. Vision correction is deemed a medical expense.

Beyond the lenses themselves, many other vision-related expenses are also typically covered by an HSA. This includes eye exams for medical purposes, contact lens solutions, and cases necessary for the proper care and maintenance of lenses. Prescription eyeglasses and prescription sunglasses are also eligible expenses, as are upgrades to prescription lenses like anti-reflective treatments. Corrective eye surgeries, such as LASIK, also qualify as an eligible expense.

Using Your HSA for Purchases

There are several practical methods for using HSA funds to pay for eligible expenses like contact lenses. One common approach is using a dedicated HSA debit card at the point of sale for immediate use.

Alternatively, individuals can pay for expenses out-of-pocket using personal funds and then submit a claim for reimbursement from their HSA administrator. This method allows HSA funds to continue growing tax-free until needed, and reimbursement can occur even years after the expense was incurred, provided the HSA was established before the expense. Some HSA providers also offer online bill pay features, allowing direct payment to providers from the HSA. Regardless of the method, retaining receipts for all purchases is important, as the IRS may request documentation to verify that withdrawals were for qualified medical expenses.