Is Shampoo Covered by an HSA?
Demystify HSA eligibility: find out which common products meet IRS medical expense rules.
A Health Savings Account (HSA) is a tax-advantaged savings and spending account designed to help individuals save for and pay for qualified medical expenses. These accounts offer a unique opportunity to manage healthcare costs with potential tax benefits, including tax-deductible contributions, tax-free growth through investments, and tax-free withdrawals for eligible expenses. Individuals with a high-deductible health plan (HDHP) are typically eligible to open and contribute to an HSA, providing a valuable tool for healthcare financial planning.
Shampoo and Personal Care Items
Regular shampoo is generally not considered an eligible expense. This applies to most everyday personal care products, such as soaps, lotions, and general toiletries. The Internal Revenue Service (IRS) typically views these items as supporting a person’s “general health” rather than treating or preventing a specific medical condition. Therefore, standard shampoos and similar personal hygiene products do not meet the criteria for qualified medical expenses.
Medicated and Prescribed Products
While regular shampoo is not covered, exceptions exist for certain medicated or specially formulated hair and skin products. Medicated shampoos designed to treat specific scalp conditions like severe dandruff, psoriasis, eczema, or lice can be HSA-eligible. These products contain active medical ingredients that address a diagnosed health issue.
To qualify, these items often require a prescription from a healthcare provider or a Letter of Medical Necessity (LMN). An LMN is a document from a medical professional confirming the necessity of the product for treating a specific medical condition. This documentation substantiates the expense is for medical treatment, not general health or cosmetic use.
General HSA Eligibility Requirements
The IRS outlines specific criteria for what constitutes a “qualified medical expense.” According to IRS Publication 502, these expenses must be primarily for the diagnosis, cure, mitigation, treatment, or prevention of disease, or for the purpose of affecting any structure or function of the body. The expense must be aimed at alleviating a physical or mental defect or illness. Expenses for general health, cosmetic purposes, or items beneficial to overall wellness without addressing a specific medical condition are typically excluded.
Verifying Item Eligibility
To confirm if a specific product or service is HSA-eligible, individuals can consult official IRS publications. HSA plan administrators or custodians often provide lists of eligible items and can offer clarification. Many retailers and third-party services also maintain online databases of HSA-eligible products. Retain all receipts, prescriptions, and any Letters of Medical Necessity for tax purposes, as these documents serve as proof of eligibility in case of an IRS audit.