Is Toilet Paper an HSA-Eligible Expense?

A Health Savings Account (HSA) offers a tax-advantaged way to save and pay for qualified medical expenses. These accounts are paired with high-deductible health plans and provide a triple tax benefit: contributions are tax-deductible, earnings grow tax-free, and withdrawals for eligible expenses are also tax-free. Understanding what constitutes an eligible expense is important for maximizing the benefits of an HSA.

Understanding HSA-Eligible Expenses

The Internal Revenue Service (IRS) sets guidelines for what qualifies as a medical expense for HSA purposes. Generally, an expense is considered eligible if it is primarily for the “diagnosis, cure, mitigation, treatment, or prevention of disease, or for the purpose of affecting any structure or function of the body.” This definition covers a wide range of services and products aimed at alleviating or preventing a physical or mental disability or illness.

Common examples of unequivocally eligible medical expenses include doctor visits, prescription medications, dental care, vision care, and medical supplies like bandages. These are straightforward because their primary purpose directly aligns with medical care. However, the IRS specifically states that expenses “merely beneficial to general health,” such as vitamins or a vacation, are not considered medical care.

Toilet Paper and General Household Items Eligibility

Toilet paper is not an HSA-eligible expense under normal circumstances. It falls into the category of general household items used for personal hygiene and sanitation, not primarily for medical care. The cost of everyday products like soap, shampoo, or toothpaste is considered a personal expense rather than a medical one.

The distinction lies in the primary purpose of the item. Since toilet paper’s main function is not to diagnose, cure, mitigate, treat, or prevent a disease, or to affect a specific bodily function in a medical context, it does not meet the IRS criteria for HSA eligibility. This principle applies to most products found in a grocery or drug store that serve general well-being or hygiene.

Medical Necessity and Prescriptions

In rare instances, an item not considered a medical expense could become HSA-eligible if it is medically necessary for a diagnosed condition and supported by proper documentation. This requires a Letter of Medical Necessity (LMN) or a prescription from a licensed healthcare provider. An LMN explains why a specific product or service, usually deemed personal, is essential for treating or alleviating a particular medical condition.

For example, a specific, non-irritating type of toilet paper might be considered eligible if a medical professional prescribed it for a severe, diagnosed skin condition where standard products would worsen the ailment. The LMN must detail the specific medical necessity and how the item directly treats the condition. Without clear medical justification and documentation, general hygiene products remain ineligible.

Record Keeping for HSA Expenses

Maintaining meticulous records for all HSA expenditures is important, especially for any items that might fall into a grey area or require an LMN. The IRS requires account holders to keep sufficient records to prove that distributions were exclusively for qualified medical expenses and not reimbursed from other sources or taken as itemized deductions. This includes receipts, doctor’s notes, prescriptions, and any LMNs.

These records should be retained for at least as long as the tax return is considered “open” (typically three to seven years), as the IRS may audit HSA distributions. Failure to substantiate an expense can result in the distribution being considered taxable income and potentially subject to an additional 20% penalty. Many HSA providers offer tools to help organize electronic records, but the responsibility for documentation rests with the account holder.