Is Lice Treatment a Covered HSA Expense?
Navigate HSA eligibility for lice treatment. Understand what medical expenses are covered and how to effectively use your Health Savings Account funds.
Health Savings Accounts (HSAs) offer a tax-advantaged way to save and pay for qualified medical expenses. These accounts are available to individuals enrolled in a high-deductible health plan (HDHP). HSAs provide a triple tax advantage, allowing tax-deductible contributions, tax-free growth, and tax-free withdrawals for eligible medical costs. This financial tool helps individuals manage healthcare expenditures. This article clarifies how lice treatment expenses can be covered through an HSA.
Understanding HSA Eligibility for Medical Expenses
HSAs are designed to cover “qualified medical expenses” as defined by the Internal Revenue Service (IRS). These expenses include costs for the diagnosis, cure, mitigation, treatment, or prevention of disease. They also encompass treatments that affect any structure or function of the body.
An expense is not considered qualified if it is merely beneficial to general health, even if recommended by a medical professional. For instance, expenses for general health improvement, such as vitamins or health club memberships, are not eligible unless prescribed for a specific medical condition. The IRS provides guidance on what constitutes a qualified medical expense in Publication 502, Medical and Dental Expenses. This publication helps individuals determine the eligibility of various healthcare costs.
Covered Lice Treatment Expenses
Lice treatment expenses can be considered qualified medical expenses. Prescription medications for treating head lice, such as permethrin or malathion lotions, are eligible for HSA reimbursement. The cost of these treatments can be paid directly from an HSA or reimbursed after an out-of-pocket payment.
Over-the-counter (OTC) lice treatments, including shampoos and rinses, also qualify as HSA-eligible expenses. The CARES Act of 2020 removed the requirement for a doctor’s prescription for OTC medications, making many, including most lice treatments, directly eligible for HSA use without a prescription. Nevertheless, it is prudent for individuals to retain a doctor’s note or prescription for their records, especially if there is any uncertainty regarding their specific plan administrator’s requirements or for potential tax substantiation.
Professional lice removal services, such as those offered by specialized clinics, can also be covered by an HSA. For these services to qualify, they must be performed by a licensed medical professional or within a recognized medical facility. Other related medical supplies, such as fine-tooth combs used for the removal of lice as part of a medical treatment regimen, may also be considered eligible expenses.
Documenting and Using Your HSA Funds
Maintaining thorough records is important when using HSA funds for medical expenses. Individuals should keep itemized receipts that show the product or service purchased, date, and amount paid. For over-the-counter items, retaining the original product packaging or a detailed store receipt is also recommended. If a doctor’s note or prescription was obtained for an OTC item or professional service, this documentation should be kept with the receipt.
These records serve as substantiation in case of an IRS audit, demonstrating that the HSA funds were used for qualified medical expenses. Many HSA providers issue a linked debit card, allowing for direct payment at the time of purchase or service. Alternatively, individuals can pay for the expense out-of-pocket and then submit a claim for reimbursement from their HSA. For reimbursement, documentation such as proof of payment and an itemized receipt detailing the qualified medical expense is required.