Surprising Things You Can Buy With an HSA

A Health Savings Account (HSA) provides a powerful financial tool for managing healthcare costs. These accounts offer a triple tax advantage: contributions are tax-deductible, the funds grow tax-free, and withdrawals for qualified medical expenses are also tax-free. While many are aware of its basic applications, an HSA can cover a surprisingly wide array of expenses beyond the typical doctor’s visit or prescription. This article explores some of these less obvious, yet eligible, healthcare expenditures.

Beyond the Basics: Common Eligible Essentials

HSA funds are commonly used for doctor visits, hospital services, and prescription medications. Dental care, such as fillings and extractions, along with vision care, including eye examinations and contact lenses, are also commonly covered. An HSA can additionally be used for deductibles, copayments, and coinsurance associated with a high-deductible health plan. These conventional uses establish the foundation of an HSA’s utility in managing routine healthcare costs.

Wellness and Alternative Therapies

Beyond standard medical treatments, HSAs extend to various wellness and alternative therapies. Acupuncture treatments are eligible when used for medical care. Similarly, chiropractic care qualifies for HSA reimbursement when addressing a specific medical condition.

Medically directed weight-loss programs can also be covered by an HSA, provided they are undertaken for the treatment of a specific disease diagnosed by a physician, such as obesity or heart disease. This typically requires a doctor’s recommendation or prescription. Programs designed to help individuals stop smoking are also eligible if prescribed to address a medical condition.

Mental health services, including psychological therapy and psychiatric care, are permissible HSA expenses. Certain health education programs may qualify if they are specifically for treating a medical condition rather than for general health improvement.

Daily Living and Home Health Aids

Many everyday items and home modifications can unexpectedly qualify as HSA expenditures when linked to medical necessity. Sunscreen, for example, is eligible if it protects against sun sensitivity caused by a medical condition or medication. Contact lens solutions and reading glasses are routinely covered, acknowledging their direct role in vision correction.

Certain over-the-counter medications and feminine hygiene products became eligible for HSA reimbursement without requiring a prescription. Basic first aid supplies, such as bandages and antiseptic wipes, also fall under eligible medical expenses. Mobility aids like crutches and wheelchairs are clearly covered as they directly assist with physical limitations.

Expenses related to service animals, including their acquisition, training, and ongoing care, are eligible if the animal assists an individual with a specific medical condition, such as visual impairment. Medically necessary home modifications, like installing ramps or widening doorways, can also be covered if they are primarily for the medical care of a patient.

Navigating Eligibility: Prescription, Medical Necessity, and Documentation

Understanding the criteria for HSA eligibility is paramount. The Internal Revenue Service (IRS) defines qualified medical expenses as costs for the diagnosis, cure, mitigation, treatment, or prevention of disease, or for treatments affecting any part or function of the body. For many items or services, a key determinant of eligibility is a prescription from a doctor or a letter of medical necessity. This documentation verifies the expense’s direct relation to a diagnosed medical condition or treatment.

It is important to maintain meticulous records, including detailed receipts, for all HSA-funded purchases. These records serve as proof that withdrawals were for qualified medical expenses for tax compliance. Without proper documentation, withdrawals for otherwise eligible expenses could be subject to income tax and potential penalties if audited. This diligent record-keeping ensures that the tax advantages of an HSA are fully realized.

What is Not Covered

While HSAs offer broad coverage, certain common expenses are explicitly not eligible for reimbursement. General health items, such as vitamins taken for overall wellness rather than a specific medical condition, typically do not qualify. Similarly, gym memberships are generally ineligible unless prescribed by a doctor to treat a particular medical condition.

Cosmetic procedures are usually not covered, unless they are necessary to correct a deformity resulting from a congenital abnormality, personal injury, or a disfiguring disease. Health insurance premiums are also generally excluded from HSA eligibility, with limited exceptions such as coverage under COBRA, or for individuals receiving unemployment compensation. Understanding these exclusions helps clarify the boundaries of HSA usage.