Is Massage Therapy Covered by an HSA?

A Health Savings Account (HSA) offers a tax-advantaged way to save and pay for qualified medical expenses. Massage therapy can be an eligible expense under specific circumstances, providing a valuable way to utilize HSA funds for health management.

HSA Eligibility for Medical Expenses

A Health Savings Account allows individuals to pay for medical expenses with pre-tax dollars, which can reduce taxable income. The Internal Revenue Service (IRS) defines a qualified medical expense as costs primarily incurred for the diagnosis, cure, mitigation, treatment, or prevention of disease. Funds withdrawn from an HSA for these purposes are tax-free.

However, expenses solely for general health, wellness, or cosmetic improvements are not considered qualified medical expenses. Costs associated with health club dues, personal use items, or general nutritional supplements are ineligible. Using HSA funds for non-qualified expenses can lead to a 20% tax penalty, in addition to regular income tax, if the account holder is under 65.

Massage Therapy as a Qualified Medical Expense

Massage therapy can be considered a qualified medical expense if it is medically necessary to treat a specific medical condition. The massage must be prescribed by a licensed physician or healthcare provider to address a diagnosed illness, injury, or physical ailment. It cannot be for general relaxation, stress relief, or overall well-being. For example, massage therapy for chronic back pain, injury recovery, or specific conditions like fibromyalgia or carpal tunnel syndrome may qualify.

To substantiate medical necessity, a Letter of Medical Necessity (LMN) from a healthcare provider is required. This letter should clearly state the specific medical diagnosis, explain why massage therapy is a necessary part of the treatment plan, and outline the recommended frequency and duration of the treatment. If the treatment extends beyond the period outlined, a new LMN may be necessary. The massage therapist providing the service should also be a licensed practitioner.

Documentation and Substantiation

Thorough documentation is important for any expenses paid with HSA funds, especially for services like massage therapy. While HSA administrators might not always require submission of receipts for every transaction, the account holder is responsible for proving the eligibility of expenses in case of an IRS audit. Records should be kept for at least seven years, aligning with tax record retention periods.

Key documents to retain include the physician’s Letter of Medical Necessity, which details the medical condition and the prescribed treatment. Detailed receipts from the massage therapist are also required, showing the date of service, the type of service rendered, and the amount paid. If applicable, an Explanation of Benefits (EOB) from a health insurance provider can further support the medical nature of the expense. These records collectively demonstrate that the funds were used for qualified medical expenses, helping to avoid penalties.