Can You Use Your HSA for Workout Equipment?

Health Savings Accounts (HSAs) offer a tax-advantaged way to save and pay for qualified medical expenses. Designed for individuals with a high-deductible health plan (HDHP), HSAs allow tax-deductible contributions, tax-free growth, and tax-free withdrawals for eligible expenses. Account holders often seek to understand the definition of a “qualified medical expense” under IRS guidelines.

Defining Qualified Medical Expenses

The Internal Revenue Service (IRS) outlines specific criteria for what qualifies as a medical expense. Generally, these are costs paid for the diagnosis, cure, mitigation, treatment, or prevention of disease, or for treatments affecting any part or function of the body. This definition includes expenses for equipment, supplies, and diagnostic devices necessary for these purposes. However, expenses solely for general health improvement or cosmetic reasons typically do not qualify. For instance, items such as vitamins or a vacation, which are merely beneficial to general health, are usually not considered qualified medical expenses.

Qualifying Workout Equipment

Workout equipment is generally not considered a qualified medical expense unless it is specifically prescribed by a medical professional to treat a diagnosed medical condition. This distinction is crucial, as equipment purchased for general fitness or well-being does not qualify for HSA funds. For the expense to be eligible, it must be primarily for medical care, not for general health benefits.

To establish medical necessity, a Letter of Medical Necessity (LMN) from a physician is required. This written statement from a doctor must detail the specific medical condition being treated and explain how the workout equipment will alleviate or mitigate that condition. The LMN should also specify the type of equipment needed and the duration for which it is medically necessary, often not exceeding a 12-month period. Common conditions that might warrant prescribed exercise equipment include obesity, diabetes, hypertension, and musculoskeletal disorders.

Documentation and Reimbursement Process

Once workout equipment is deemed a qualified medical expense through an LMN, proper documentation is essential for HSA use. Account holders must maintain thorough records, including the LMN, receipts for the equipment, and any other supporting medical documentation, such as doctor’s notes. These records are crucial for tax purposes and in the event of an IRS audit, as the taxpayer is responsible for proving the eligibility of all distributions.

Payments for qualified expenses can be made either directly using an HSA debit card, or by paying out-of-pocket and then reimbursing oneself from the HSA. There is no time limit to request reimbursement for expenses incurred after the HSA was established, allowing for flexibility. Regardless of the payment method, keeping detailed records of all transactions is a requirement to demonstrate that distributions were exclusively for qualified medical expenses and not reimbursed from other sources. Failure to provide adequate documentation for non-qualified distributions can result in the amount being subject to income tax and a 20% penalty.