Does an HSA Cover a COVID Test?

A Health Savings Account (HSA) is a tax-advantaged savings account designed to help individuals manage healthcare costs. These accounts are paired with high-deductible health plans (HDHPs), allowing individuals to save and pay for qualified medical expenses with pre-tax dollars. Funds within an HSA can grow tax-free and be withdrawn tax-free for eligible healthcare needs.

Eligibility of COVID-19 Testing Costs

Qualified COVID-19 diagnostic testing costs are eligible medical expenses for HSA reimbursement or direct payment. This includes at-home COVID-19 tests and those administered by healthcare providers. The Internal Revenue Service (IRS) confirmed that at-home COVID-19 test kits are reimbursable under HSAs.

For a test to qualify, it must be for a medical purpose, such as diagnosis, treatment, mitigation, or prevention of a disease. Tests solely for employment, travel, or other non-medical reasons typically do not qualify. Personal protective equipment (PPE), including face masks, hand sanitizer, and sanitizing wipes, purchased to prevent the spread of COVID-19, also qualifies as an eligible medical expense.

The Coronavirus Aid, Relief, and Economic Security (CARES) Act allowed high-deductible health plans to cover COVID-19 testing and treatment before the deductible was met without jeopardizing HSA eligibility. This flexibility is scheduled to conclude for plan years ending after December 31, 2024. HSA funds cannot be used for reimbursement if COVID-19 tests are provided free of charge.

Coverage of Other COVID-19 Medical Expenses

Beyond diagnostic testing, HSAs cover a range of other medical expenses related to COVID-19 treatment and prevention. Doctor’s office visits for COVID-19 treatment are eligible expenses, including co-pays, deductibles, and co-insurance amounts.

Prescription medications used to treat COVID-19 are also qualified medical expenses. The CARES Act removed the previous requirement for a prescription for over-the-counter (OTC) medications, making remedies like pain relievers and fever reducers eligible for HSA use. Hospitalization costs incurred due to COVID-19 can be paid for with HSA funds.

COVID-19 vaccinations are considered preventive care and are fully eligible for HSA coverage. The CARES Act also expanded the eligibility of telehealth and virtual healthcare services, allowing HDHPs to cover these services before the deductible is met.

How to Use Your HSA for These Expenses

Utilizing your HSA for qualified medical expenses, including those related to COVID-19, involves straightforward processes. One common method is to use an HSA debit card directly at the point of service. Alternatively, individuals can pay for expenses out-of-pocket and then reimburse themselves from their HSA later.

Maintaining meticulous records is important for HSA management. It is advisable to keep all receipts, Explanation of Benefits (EOB) statements, and medical invoices for any expenses paid with or reimbursed by your HSA. These documents serve as proof of qualified medical expenses in case of an IRS audit, and without them, distributions could be subject to taxes and penalties.

The process for requesting reimbursement typically involves submitting a claim to your HSA custodian, along with the supporting documentation. A significant advantage of HSAs is the flexibility regarding the timing of reimbursements. There is no deadline to reimburse yourself for past qualified medical expenses, provided the expense was incurred after your HSA was established. This allows individuals to pay for current medical costs out-of-pocket and let their HSA funds grow, then reimburse themselves years or even decades later.