Is Nasal Spray an HSA-Eligible Expense?

A Health Savings Account (HSA) is a tax-advantaged savings vehicle for healthcare expenses. It allows individuals to save and pay for qualified medical costs with pre-tax dollars. Its purpose is to provide a dedicated, tax-efficient fund for eligible medical, dental, and vision care.

Understanding General HSA Eligibility

The Internal Revenue Service (IRS) outlines eligible medical expenses for HSA purposes in IRS Publication 502, “Medical and Dental Expenses.” An expense must be primarily for the diagnosis, cure, mitigation, treatment, or prevention of disease, or for affecting any structure or function of the body.

Historically, many over-the-counter (OTC) medications required a doctor’s prescription or a Letter of Medical Necessity to be HSA-eligible. However, the Coronavirus Aid, Relief, and Economic Security (CARES) Act, enacted in March 2020, significantly changed this rule. Most OTC medications are now HSA-eligible without a prescription. This expanded the types of items individuals can purchase with their HSA funds.

Nasal Spray Eligibility

Nasal sprays are eligible for reimbursement through a Health Savings Account. This eligibility stems from their therapeutic use in treating medical conditions that affect the nasal passages. Both prescription-strength and over-the-counter nasal sprays are included.

Prescription nasal sprays, often used for chronic conditions like severe allergies or sinus inflammation, are HSA-eligible. A wide array of over-the-counter nasal sprays, such as decongestant, antihistamine, and steroid sprays, also qualify. Even saline nasal sprays, when marketed for medical purposes like congestion relief or nasal rinsing, are eligible.

Using Your HSA and Record Keeping

Utilizing HSA funds for eligible expenses is straightforward, typically involving direct payment with an HSA debit card or paying out-of-pocket and then reimbursing yourself from the account. Many HSA providers issue a debit card linked directly to your account, allowing for immediate payment at the point of sale. Alternatively, you can pay for qualified medical expenses using personal funds and then submit a claim to your HSA administrator for reimbursement.

Maintaining meticulous records is a requirement for HSA users and is important for tax compliance. You must retain detailed documentation, such as receipts, invoices, and, if applicable, any prescriptions or Letters of Medical Necessity. These records serve as proof that distributions from your HSA were used exclusively for qualified medical expenses and were not reimbursed from other sources or claimed as an itemized deduction. Keeping these documents organized for several years, often aligning with the tax audit period, is a sound practice in case of an IRS inquiry.