Is Distilled Water for CPAP HSA Eligible?

Health Savings Accounts (HSAs) offer a tax-advantaged way for individuals to save and pay for qualified medical expenses, playing a significant role in managing healthcare costs. Many people rely on Continuous Positive Airway Pressure (CPAP) machines as a common treatment for sleep apnea, a condition affecting breathing during sleep. The daily operation of these devices often involves specific requirements, leading to questions about the eligibility of associated costs, such as distilled water, for HSA reimbursement.

Understanding HSA-Eligible Expenses

A Health Savings Account (HSA) is a tax-advantaged savings account for qualified medical expenses. To be considered HSA-eligible, expenses must primarily be for the diagnosis, cure, mitigation, treatment, or prevention of disease, or for the purpose of affecting any structure or function of the body, as defined by Internal Revenue Code Section 213(d). These funds can cover a broad range of healthcare costs, including doctor visits, prescription medications, dental care, vision care, and various types of medical equipment and supplies.

Distributions from an HSA for non-qualified expenses are subject to income tax and may incur a 20% penalty, emphasizing the importance of understanding eligible uses. The Internal Revenue Service (IRS) outlines these guidelines to ensure funds are directed towards expenses that address a medical condition rather than general health or cosmetic purposes.

Distilled Water for CPAP and HSA Eligibility

Distilled water used for a CPAP machine’s humidifier is an HSA-eligible expense. CPAP machines themselves are qualified medical equipment because they are medically necessary devices prescribed for the treatment of sleep apnea. The use of distilled water is integral to the proper functioning and maintenance of the CPAP device and the safety of the user.

Distilled water is recommended by CPAP manufacturers and medical experts because it is free from minerals, chemicals, and impurities found in tap or purified water. These contaminants can lead to mineral buildup and scaling within the humidifier chamber, potentially damaging the machine, shortening its lifespan, and fostering bacterial growth. Using distilled water prevents these issues, ensuring the CPAP machine operates effectively and safely, and prevents impurities from entering the respiratory system that could cause irritation or health problems. Given its role in maintaining medically necessary equipment and promoting safe therapeutic use, distilled water falls under the category of medical supplies essential for treatment.

Maintaining Proper Records

Maintaining accurate and comprehensive records is important when using HSA funds for medical expenses, including distilled water. It is prudent to retain all purchase receipts for distilled water, given its direct link to the prescribed CPAP machine. These receipts should clearly show the amount paid, the vendor, and the date of purchase.

You should also keep documentation related to the CPAP machine itself, such as the original prescription or a letter of medical necessity for the device. This documentation substantiates the medical necessity of the overall therapy, which then supports the eligibility of associated supplies like distilled water. Proof that distributions were exclusively for qualified medical expenses is necessary in the event of an IRS audit. Keeping records, such as receipts and Explanation of Benefits (EOBs), for at least three years can help avoid potential penalties.