Is All Sunscreen HSA Eligible Under IRS Rules?

Health Savings Accounts (HSAs) offer a tax-advantaged way for individuals with high-deductible health plans to save and pay for qualified medical expenses. A common question among account holders concerns the eligibility of everyday health items, such as sunscreen, for HSA reimbursement. Understanding Internal Revenue Service (IRS) guidelines is important for maximizing HSA benefits.

Understanding HSA-Eligible Expenses

The Internal Revenue Service (IRS) defines a qualified medical expense as costs primarily incurred for the diagnosis, cure, mitigation, treatment, or prevention of disease, or for treatments affecting any part or function of the body. Expenses that are merely beneficial to general health, like vitamins or cosmetic procedures, are not eligible. This distinction is central to determining what can be reimbursed from an HSA.

Before March 2020, over-the-counter (OTC) medications and products required a prescription to be considered HSA-eligible. However, the Coronavirus Aid, Relief, and Economic Security (CARES) Act permanently removed this requirement, making many OTC items, including certain medicines and menstrual care products, eligible without a doctor’s note. While many items are now eligible, personal care products, even if they offer health benefits, are not covered unless they address a specific medical condition.

Sunscreen Eligibility Guidelines

Not all sunscreen products qualify as HSA-eligible expenses. For sunscreen to be considered a qualified medical expense, it must be primarily for medical care, focusing on the prevention of a physical illness or disease rather than cosmetic or tanning purposes. The IRS recognizes sunscreen’s role in preventing skin cancer and other dermatological conditions.

Specifically, sunscreens with a Sun Protection Factor (SPF) of 15 or higher and broad-spectrum protection are eligible for HSA reimbursement, recognized for their effectiveness in preventing harmful UV radiation effects. Products that combine SPF with cosmetic functions, such as moisturizers or cosmetics with added sunscreen, are not eligible because they are considered “dual-purpose” by the FDA.

A doctor’s prescription is not required for eligible sunscreen due to the CARES Act changes regarding over-the-counter medical expenses. However, in ambiguous situations or for specialized products, a Letter of Medical Necessity (LOMN) from a healthcare provider can help substantiate the medical need. An LOMN, which outlines the medical necessity of a product or service, provides additional evidence to justify the expense in case of an IRS inquiry.

Documenting Sunscreen Purchases

Maintaining detailed records for all Health Savings Account expenditures is important, as taxpayers are responsible for proving expense eligibility. This record-keeping is particularly relevant for items like sunscreen, where eligibility depends on specific product characteristics. Accurate documentation can help avoid penalties in the event of an IRS audit.

Required documentation includes receipts that clearly display the product name, date of purchase, and amount paid. For sunscreen, it is important to retain evidence of the SPF level, such as product packaging or a detailed receipt description. These records should be kept for at least three years after the tax return is filed, or as long as the HSA account remains open, whichever period is longer. Many HSA providers offer digital tools for storing receipts, which can simplify the record-keeping process.