Does an HSA Cover Dermatology Services?

A Health Savings Account (HSA) is a tax-advantaged savings account for managing healthcare costs. This account allows for pre-tax contributions and tax-free withdrawals when used for qualified medical expenses. Funds within an HSA can grow tax-free and remain available year after year, providing a flexible way to save for future health needs. Understanding which expenses qualify for HSA coverage is important for maximizing its benefits, particularly when considering dermatology services.

Understanding Qualified Medical Expenses

The Internal Revenue Service (IRS) defines qualified medical expenses as costs for the diagnosis, cure, mitigation, treatment, or prevention of disease. These expenses also include treatments aimed at affecting any structure or function of the body. This definition emphasizes that the expense must be primarily for medical care rather than for cosmetic reasons.

For an expense to qualify, it must be primarily incurred for the alleviation or prevention of a physical or mental defect or illness. Expenses that are merely beneficial to general health, such as vitamins or a vacation, do not qualify. IRS Publication 502 provides guidance on what constitutes a medical expense for tax purposes. Adhering to these guidelines ensures proper use of HSA funds and avoids potential tax implications.

Dermatology Expenses Covered by HSA

Many dermatology services are considered qualified medical expenses and can be covered by an HSA when they address a medical condition. Visits to a dermatologist for the diagnosis, treatment, or management of skin, hair, or nail conditions are eligible. This includes consultations and procedures for common issues such as acne, eczema, psoriasis, rosacea, or fungal infections.

Preventive care, such as skin cancer screenings, biopsies, and subsequent treatments like excisions or Mohs surgery, are also HSA-eligible. Prescription medications for dermatological issues, along with certain over-the-counter acne products, can be paid for with HSA funds. Additionally, diagnostic tests and procedures for medically necessary mole or wart removal are covered. Total body photography, when recommended by a dermatologist for monitoring conditions like melanoma or atypical moles, is also an eligible expense.

Dermatology Expenses Not Covered by HSA

Dermatology expenses incurred solely for cosmetic purposes are not eligible for HSA reimbursement. This exclusion applies to procedures primarily aimed at improving appearance rather than treating a specific medical condition. For example, purely aesthetic Botox injections, chemical peels, or laser hair removal are not covered.

Other procedures such as cosmetic fillers, facelifts, liposuction, teeth whitening, hair transplants, or breast augmentation are also excluded if their main purpose is aesthetic enhancement. The removal of skin tags, moles, or scars solely for cosmetic reasons, without an underlying medical necessity, does not qualify. Similarly, general skincare products that are not marketed or labeled as treatments for a medical condition, or facials performed purely for aesthetic improvement, are not HSA-eligible. If a procedure has both a medical and cosmetic component, only the portion directly related to medical necessity might be eligible, requiring a Letter of Medical Necessity from a healthcare provider.