When Are Laxatives an HSA Eligible Expense?

A Health Savings Account (HSA) is a tax-advantaged savings account established to help individuals save and pay for qualified medical expenses. These accounts offer a triple tax advantage: contributions are tax-deductible, earnings grow tax-free, and withdrawals for eligible medical expenses are also tax-free. HSAs serve as a valuable tool for managing healthcare costs while providing potential long-term savings.

General Rules for HSA Eligible Expenses

For an expense to be considered HSA eligible, it must be for medical care as defined by the Internal Revenue Service (IRS). The IRS specifies that medical expenses are the costs of diagnosis, cure, mitigation, treatment, or prevention of disease. They also include costs for treatments affecting any structure or function of the body. Comprehensive guidance on what qualifies as a medical expense is available in IRS Publication 502, “Medical and Dental Expenses.”

Common categories of eligible expenses include doctor’s visits, hospital services, prescription medications, and various medical supplies. However, expenses incurred for general health or cosmetic purposes do not qualify. Expenses must relate directly to a medical condition or treatment.

Laxatives and Specific Eligibility Conditions

Laxatives are considered an HSA-eligible expense because they treat constipation, a diagnosable medical condition. This applies whether laxatives are obtained via a prescription or purchased over-the-counter (OTC). Prior to 2020, over-the-counter medications typically required a doctor’s prescription to be HSA eligible.

The Coronavirus Aid, Relief, and Economic Security (CARES) Act, enacted in March 2020, permanently eliminated this prescription requirement for OTC medicines. This means that both prescription and over-the-counter laxatives are now eligible for HSA reimbursement. The eligibility is based on the product’s intended use for treating a medical condition.

Maintaining Records for Laxative Purchases

Maintaining records for all HSA-funded purchases, including laxatives, is important. This includes retaining receipts that clearly show the date of purchase, the item bought, and the amount paid. Such documentation serves as proof of the expense if it is requested by your HSA administrator or the IRS.

While a prescription is no longer required for over-the-counter laxatives to be HSA eligible, keeping doctor’s notes or medical records related to the condition for which the laxatives were used can provide additional substantiation. These records are important for tax purposes and can be helpful in the event of an IRS audit. Proper record-keeping helps ensure compliance with tax regulations and accurate accounting of HSA funds.