Can You Use Your HSA for Mole Removal?

A Health Savings Account (HSA) offers a tax-advantaged way to save and pay for qualified medical expenses. These accounts are designed for individuals enrolled in a high-deductible health plan (HDHP) and provide a triple tax advantage: contributions are tax-deductible, earnings grow tax-free, and withdrawals for qualified medical expenses are also tax-free. Many people wonder if specific procedures, such as mole removal, can be covered by these beneficial accounts.

HSA Qualified Medical Expenses

The Internal Revenue Service (IRS) defines what constitutes a “qualified medical expense” for HSA purposes. These are costs paid for the diagnosis, cure, mitigation, treatment, or prevention of disease, or for affecting any structure or function of the body. IRS Publication 502 provides guidance on these eligible expenses. Common examples include doctor visits, prescription medications, hospital care, and dental or vision treatments.

Expenses for general health or cosmetic purposes do not qualify. Procedures aimed solely at improving appearance, such as teeth whitening or elective cosmetic surgery, are not considered qualified medical expenses. However, if a cosmetic procedure is necessary to correct a deformity from a congenital abnormality, personal injury, or disfiguring disease, it qualifies.

Medical Necessity for Mole Removal

Whether mole removal qualifies as an HSA-eligible expense depends on its medical necessity. If a mole removal is performed for the diagnosis, cure, mitigation, treatment, or prevention of a disease, it is considered a qualified medical expense. This includes situations where a mole is suspicious, precancerous, or cancerous, or if it causes physical irritation, pain, or disfigurement due to a medical condition. Dermatological services, including skin examinations and the treatment of skin conditions like acne, psoriasis, or eczema, are HSA-eligible when medically necessary.

Purely cosmetic mole removal, undertaken solely to improve appearance, does not qualify for HSA reimbursement. Removing a mole simply because it is aesthetically undesirable is not an eligible expense. A medical diagnosis or a recommendation from a healthcare provider confirming the medical necessity is important for the expense to qualify.

Documentation and Record Keeping

Maintaining thorough records is important when using HSA funds, especially for procedures like mole removal where medical necessity may be questioned. The IRS does not require you to submit receipts when filing your taxes, but you must be able to prove that distributions were for qualified medical expenses if audited. You should keep detailed documentation for at least three to seven years, or as long as your tax return is subject to audit.

Key documents include itemized receipts from the healthcare provider, showing the service received and amount paid. Also keep the Explanation of Benefits (EOB) from your insurance company, detailing how your claim was processed and any portion covered by insurance. A doctor’s note or a “Letter of Medical Necessity” (LMN) for the mole removal is recommended. This letter should explain why the procedure was necessary, providing supporting evidence such as lab results or medical history. These records demonstrate to the IRS that the expense was qualified.