Can You Use Your HSA for a Breast Lift?

A Health Savings Account (HSA) offers a unique tax-advantaged way to save and pay for healthcare expenses. Many individuals wonder about the scope of these accounts, particularly concerning specific medical procedures. This article explores whether a breast lift can be considered an eligible expense for HSA funds, navigating the Internal Revenue Service (IRS) guidelines that govern these accounts.

Qualified Medical Expenses for HSAs

The IRS defines qualified medical expenses as costs paid for the diagnosis, cure, mitigation, treatment, or prevention of disease, and for treatments affecting any part or function of the body. These expenses must primarily alleviate a physical or mental defect or illness. Common examples include doctor visits, prescription medications, dental care, vision care, and preventative screenings. Funds withdrawn from an HSA for these purposes are tax-free.

However, expenses incurred solely for cosmetic purposes are not considered qualified medical expenses. This exclusion applies unless the procedure is necessary to ameliorate a deformity arising from a congenital abnormality, a personal injury, or a disfiguring disease. Cosmetic surgery aims to improve appearance without promoting proper body function or preventing/treating illness. Therefore, procedures purely for aesthetic enhancement do not qualify for HSA coverage.

The IRS provides guidance on eligible expenses in Publication 502. While this publication lists many common expenses, it is not exhaustive. The underlying principle remains whether the expense is for medical care that treats or prevents a disease or affects a body function, rather than for general health or appearance improvement.

Breast Lift Medical Necessity

A breast lift, while often considered cosmetic, can qualify as a medical expense if it addresses a specific medical condition. The key distinction lies in whether the procedure treats a diagnosed disease, alleviates physical discomfort, or corrects a deformity, rather than being purely for aesthetic enhancement. For instance, breast reconstruction surgery following a mastectomy for cancer is recognized as a qualified medical expense because it ameliorates a disfiguring condition. Similarly, breast reduction surgery, which often includes a lift, can be medically necessary to relieve chronic back, neck, or shoulder pain.

Physical symptoms such as chronic rashes or skin irritation under the breasts, significant grooves in the shoulders from bra straps, or nerve pain due to excessive breast weight can indicate medical necessity. A physician’s diagnosis is required to establish that the breast lift or reduction treats these medical issues. The procedure must aim to restore proper function or alleviate symptoms, aligning with the IRS definition of medical care.

Substantiating HSA Claims

If a breast lift meets the medical necessity criteria, proper documentation is needed for HSA reimbursement. Individuals must retain records, including invoices and payment receipts for the procedure. These documents should clearly show the amount paid, the service provider, and the date of the service.

A key piece of documentation is a written diagnosis and recommendation from a qualified physician. This letter of medical necessity must state the medical condition being treated and how the breast lift procedure is necessary to alleviate or correct that condition. This demonstrates the expense is for medical care, not solely cosmetic purposes. Individuals should also keep Explanation of Benefits (EOB) statements from their health insurance, detailing any amounts paid by insurance and the patient’s remaining responsibility.

These records are important in case of an IRS audit, where the account holder is responsible for proving that distributions were used exclusively for qualified medical expenses. The individual must maintain these records for as long as their tax return is subject to audit. Many HSA providers offer digital tools for easy record-keeping.

Consequences of Ineligible Withdrawals

Using HSA funds for expenses that do not meet the IRS definition of qualified medical expenses carries financial implications. If an individual withdraws funds for a non-qualified expense, the amount becomes subject to income tax. This means the distribution will be added to the individual’s gross income for that tax year.

In addition to income tax, a 20% penalty tax applies to non-qualified withdrawals if the account holder is under age 65. For example, a $1,000 non-qualified withdrawal for someone under 65 could result in $200 in penalties, plus the applicable income tax. This penalty does not apply if the account holder is age 65 or older, or if they are disabled. The IRS requires account holders to report all HSA distributions on Form 8889 with their tax return, and it is the individual’s responsibility to ensure compliance.