Is Melatonin an HSA-Eligible Expense?
Clarify if melatonin is an HSA-eligible expense. Understand the guidelines for Health Savings Account reimbursement of common supplements.
A Health Savings Account (HSA) functions as a tax-advantaged savings vehicle to cover qualified healthcare expenses. This article clarifies whether melatonin, a widely used supplement, qualifies as an eligible HSA expense.
Health Savings Accounts and Eligibility Rules
Health Savings Accounts are for paying or reimbursing qualified medical expenses. The Internal Revenue Service (IRS) defines qualified medical expenses as costs for medical care, diagnosis, cure, mitigation, treatment, or prevention of disease. This includes treatments affecting any body structure or function. For an expense to be qualified, its primary purpose must be medical care, not merely general health or cosmetic reasons. This distinction ensures HSA funds are used for legitimate healthcare needs as outlined in IRS guidance, such as IRS Publication 502. Understanding this definition is important for evaluating eligibility.
Over-the-Counter Medications and HSA Coverage
Historically, over-the-counter (OTC) medications required a doctor’s prescription for HSA reimbursement. Without a prescription, these purchases were not qualified medical expenses. The CARES Act in March 2020 removed this requirement for most OTC medicines, drugs, and menstrual care products. This made a broad range of non-prescription medications eligible for HSA reimbursement without a physician’s note. The expense must still be for medical care, aligning with the general definition of a qualified medical expense.
Melatonin’s Eligibility for HSA Reimbursement
Melatonin is an eligible HSA expense following CARES Act changes. As an OTC supplement, it falls under non-prescription medicines and drugs that no longer require a prescription. Eligibility applies when melatonin is used for a specific medical purpose, such as addressing sleep disturbances, managing jet lag, or other conditions affecting a body function. The IRS guidance broadly permits expenses for medicines and drugs that are not prescribed, provided they are used for diagnosis, cure, mitigation, treatment, or prevention of disease, or for affecting any structure or function of the body. Therefore, if melatonin is purchased to treat a medical condition like insomnia or a sleep disorder, rather than for general wellness without a specific medical indication, it qualifies.
Purchasing and Record-Keeping for HSA Purchases
Eligible HSA expenses, including melatonin, can be paid in several ways. Many HSA providers issue a debit card for direct payment. Alternatively, individuals can pay out-of-pocket and reimburse themselves from their HSA.
Maintaining detailed records for all HSA-funded expenses is important. This includes receipts, invoices, and relevant documentation, such as a doctor’s note if a medical condition prompted the purchase. These records are essential for tax purposes and to substantiate qualified expenses during an IRS audit, which can occur for up to three years after filing. Individuals should also consult IRS Publication 969 for comprehensive guidance on HSAs and consult their HSA administrator for specific procedures or requirements.
This article aims to clarify whether melatonin, a widely used supplement, qualifies as an eligible expense for HSA reimbursement.
Health Savings Accounts and Eligibility Rules
Health Savings Accounts are established exclusively for the purpose of paying or reimbursing qualified medical expenses. The Internal Revenue Service (IRS) defines qualified medical expenses as costs incurred for medical care, diagnosis, cure, mitigation, treatment, or prevention of disease, including treatments that affect any structure or function of the body. For an expense to be considered qualified, its primary purpose must be for medical care, rather than merely beneficial to general health or for cosmetic reasons. This distinction ensures that funds from an HSA are used for legitimate healthcare needs as outlined in IRS guidance, such as that found in IRS Publication 502. Understanding this fundamental definition is important when evaluating the eligibility of various health-related products.
Over-the-Counter Medications and HSA Coverage
Historically, over-the-counter (OTC) medications generally required a doctor’s prescription for HSA reimbursement. Without such a prescription, these purchases were not typically considered qualified medical expenses. The Coronavirus Aid, Relief, and Economic Security (CARES) Act in March 2020 removed the requirement for a prescription for most OTC medicines and drugs, as well as for menstrual care products. Consequently, a broad range of common non-prescription medications became eligible for HSA reimbursement without a physician’s note. The expense must still be for medical care, aligning with the general definition of a qualified medical expense, even if it is available without a prescription.
Melatonin’s Eligibility for HSA Reimbursement
Melatonin is generally considered an eligible expense for HSA reimbursement following the changes introduced by the CARES Act. As an over-the-counter supplement, it falls under the category of non-prescription medicines and drugs that no longer require a physician’s prescription. This eligibility applies when melatonin is used for a specific medical purpose, such as addressing sleep disturbances, managing jet lag, or other conditions that affect a body function. The IRS guidance broadly permits expenses for medicines and drugs that are not prescribed, provided they are used for the diagnosis, cure, mitigation, treatment, or prevention of disease, or for affecting any structure or function of the body. Therefore, if melatonin is purchased to treat a medical condition like insomnia or a sleep disorder, it qualifies as a medical expense. It is important that the use is for a medical condition rather than for general wellness without a specific medical indication.
Purchasing and Record-Keeping for HSA Purchases
Individuals can pay for eligible HSA expenses, including melatonin, in several ways. Many HSA providers issue a debit card linked directly to the account, allowing for direct payment at the point of sale. Alternatively, one can pay out-of-pocket and then reimburse themselves from their HSA, a common practice for expenses paid with personal funds.
Maintaining detailed records for all HSA-funded expenses is a critical step for account holders. This includes retaining receipts, invoices, and any relevant documentation, such as a doctor’s note if a specific medical condition prompted the purchase. These records are essential for tax purposes and to substantiate that expenses were qualified in the event of an audit by the IRS, which can occur for up to three years after filing. Individuals should also consult IRS Publication 969 for comprehensive guidance on HSAs and check with their HSA administrator for specific procedures or requirements.