What Can You Use Your HSA Debit Card For?

A Health Savings Account (HSA) offers a tax-advantaged way to save for medical expenses. These accounts are paired with high-deductible health plans (HDHPs), allowing individuals to contribute pre-tax dollars that grow tax-free. The HSA debit card provides convenient access to these funds for qualified healthcare costs.

Eligible Medical Expenses

Funds in a Health Savings Account can be used for a broad range of qualified medical expenses, defined by the Internal Revenue Service (IRS). These expenses cover costs for the diagnosis, cure, mitigation, treatment, or prevention of disease, or for affecting any structure or function of the body. Eligible expenses extend to the HSA holder, their spouse, and qualified dependents.

Routine doctor visits, specialist fees, and hospital services are covered expenses. This includes consultations with primary care physicians, dermatologists, chiropractors, and expenses for laboratory tests. Prescription medications also fall under eligible medical expenses.

Dental care, such as cleanings, fillings, sealants, and orthodontia, is an eligible expense. Vision care costs, including eye exams, prescription eyeglasses, contact lenses, and corrective eye surgeries like LASIK, can be paid for with HSA funds.

Mental health services, including therapy and counseling, are qualified medical expenses. Durable medical equipment, such as crutches, wheelchairs, or blood sugar test kits for diabetics, can be purchased. Acupuncture and chiropractic care are also eligible services.

The CARES Act made over-the-counter (OTC) medications and menstrual care products eligible for HSA use without a prescription. This expanded eligibility includes items like pain relievers, cold and flu remedies, antacids, and feminine hygiene products.

Certain long-term care services and qualified long-term care insurance premiums can also be paid with HSA funds, subject to annual IRS limits based on age. These expenses must be for services required by a chronically ill individual as part of a prescribed plan of care.

Non-Eligible Expenses and Specific Exclusions

Certain expenses are explicitly excluded from HSA eligibility. Using HSA funds for non-qualified expenses can lead to adverse tax consequences. These non-eligible items are not primarily for the diagnosis, cure, mitigation, treatment, or prevention of disease.

Cosmetic procedures are generally not eligible unless they are medically necessary to correct a deformity resulting from a congenital abnormality, personal injury, or a disfiguring disease. Expenses related to general health, such as gym memberships, vitamins or supplements for general well-being, and toiletries, are typically excluded. Weight loss programs are only eligible if they are a treatment for a specific disease diagnosed by a physician, such as obesity or heart disease.

Health insurance premiums are generally not qualified expenses for HSA use. However, there are specific exceptions: HSA funds can be used to pay premiums for COBRA continuation coverage, Medicare Parts A, B, and D, and qualified long-term care insurance. Additionally, premiums paid while receiving federal or state unemployment benefits may also qualify.

Other common non-eligible expenses include childcare expenses, funeral expenses, and expenses for illegal operations or treatments. If HSA funds are used for non-eligible expenses before the account holder reaches age 65, the withdrawn amount becomes taxable income. Furthermore, a 20% penalty typically applies to such distributions.

Maintaining Proper Records

Maintaining thorough documentation for all HSA debit card transactions is important for account holders. These records are crucial for substantiating the eligibility of expenses, especially in the event of an IRS audit. The responsibility for proving the legitimacy of expenses rests entirely with the HSA account holder.

Receipts and other supporting documents should be retained for all purchases made with HSA funds. Ideally, these records should include the date of service, a clear description of the service or item, the amount paid, and the name of the provider or vendor. This detailed information helps to verify that the expense meets IRS guidelines for qualified medical costs.

Practical methods for record-keeping include creating organized physical files or utilizing digital storage solutions. Many HSA administrators offer online portals where account holders can upload and manage their receipts electronically, which can simplify the process. Even if an HSA debit card is used, it is still the account holder’s obligation to ensure and prove that the expense was qualified.