Does an HSA Cover Deodorant and Personal Care Items?

A Health Savings Account (HSA) offers a tax-advantaged way for individuals to save and pay for qualified medical expenses. These accounts help manage healthcare costs, allowing funds to grow and be withdrawn tax-free for eligible expenditures. A frequent question among account holders concerns the eligibility of common household products, particularly whether items like deodorant can be covered.

General HSA Eligibility Rules

The Internal Revenue Service (IRS) defines a “qualified medical expense” as costs primarily for the diagnosis, cure, mitigation, treatment, or prevention of disease, or for affecting any structure or function of the body. Expenses for general health, hygiene, or items that merely promote overall well-being are not considered qualified medical expenses, even if a healthcare provider recommends them. Common eligible expenses include doctor visits, prescription medications, and hospital stays. The IRS provides guidance on these definitions in publications like IRS Publication 502.

Over-the-Counter Product Eligibility

The eligibility of over-the-counter (OTC) products for HSA reimbursement has evolved. Historically, many OTC medicines required a doctor’s prescription. However, the Coronavirus Aid, Relief, and Economic Security (CARES) Act, enacted in March 2020, eliminated this requirement, making a broader range of OTC medicines and products HSA-eligible without a prescription. Despite this, the product must still meet the fundamental “medical care” definition. Common OTC items like pain relievers, cold and flu medicines, and bandages are eligible because they treat or prevent specific medical conditions.

Deodorant and Personal Care Item Coverage

Deodorant is not considered a qualified medical expense and is therefore ineligible for HSA reimbursement. This is because deodorant serves as a personal hygiene item for general care and odor control, rather than for the diagnosis, cure, mitigation, treatment, or prevention of a specific medical condition or disease. Internal Revenue Code Section 213 specifies that medical care must relate to affecting a structure or function of the body in a therapeutic way.

Many other personal care items are also ineligible for HSA coverage. These include products like toothpaste, soap, shampoo, cosmetics, and general skincare lotions. These items are viewed as everyday personal use products rather than medical treatments, even if they contribute to overall cleanliness.

Consequences of Using HSA Funds for Ineligible Expenses

Using HSA funds for expenses that are not qualified medical expenses carries financial repercussions. Any such withdrawals are considered taxable income in the year they are distributed. If the account holder is under the age of 65, these non-qualified distributions are subject to an additional 20% penalty.

It is important for account holders to maintain accurate records and receipts for all HSA expenditures. This documentation helps substantiate the eligibility of expenses in case of an IRS audit. To avoid potential tax liabilities and penalties, it is advisable to verify an expense’s eligibility before using HSA funds.