Where Can I Use My Health Savings Card?

A Health Savings Account (HSA) card is a financial tool that helps individuals manage healthcare costs. It allows you to use pre-tax funds to pay for qualified medical expenses, reducing your taxable income.

Eligible Health Expenses

Qualified medical expenses are defined by the IRS as costs incurred primarily for the diagnosis, cure, mitigation, treatment, or prevention of disease, or for affecting any structure or function of the body. This includes medical, dental, and vision care for yourself, your spouse, and eligible dependents. Common services that qualify include doctor visits, hospital stays, medical copays, deductibles, coinsurance, ambulance services, laboratory fees, chiropractic care, acupuncture, and physical exams.

Prescription medications are covered, along with certain over-the-counter (OTC) medications and products like acid controllers, allergy medicine, pain relievers, and menstrual care products. The CARES Act of 2020 expanded eligibility to include OTC medications and menstrual products without a doctor’s prescription. Vision care expenses, such as eye exams, prescription eyeglasses, contact lenses and solutions, and laser eye surgery, are eligible. Dental expenses like cleanings, X-rays, fillings, braces, and dentures also qualify.

HSAs also cover durable medical equipment like crutches, wheelchairs, and hearing aids, including their batteries. Specialized items such as breast pumps, lactation supplies, blood-sugar test kits, and medical alert bracelets are eligible. Costs for wellness and treatment programs, like smoking cessation and doctor-prescribed weight-loss programs for a specific medical illness, can be reimbursed. Travel expenses, including transportation and lodging, incurred to receive medical care are also covered.

Certain insurance premiums can also be paid with HSA funds, specifically long-term care insurance, COBRA premiums, and Medicare Parts A, B, or D premiums for individuals aged 65 or older. Fertility treatments, including in-vitro fertilization, and family planning items like birth control and pregnancy tests are qualified expenses. For a more exhaustive guide, consult IRS Publication 502.

How to Use Your Card

Using your HSA card for qualified medical expenses is similar to using a standard debit or credit card. Many HSA providers issue a debit card for direct payment at the point of sale. When visiting a healthcare provider, such as a doctor’s office, hospital, or clinic, you can swipe your HSA card to cover copayments, deductibles, or the full cost of eligible services.

For prescription medications and eligible over-the-counter items, the HSA card can be used directly at pharmacies. Many online pharmacies and medical supply stores also accept HSA cards for qualified purchases. If you pay for an eligible medical expense out-of-pocket, you can reimburse yourself from your HSA by submitting a claim to your provider, often through their website or mobile app, with supporting documentation.

Some HSA plans allow ATM withdrawals for reimbursement of eligible expenses, though a transaction fee may apply. When making an ATM withdrawal, select “checking” rather than “savings” from the account options. Regardless of the method, funds must be for expenses incurred after your HSA was established.

Non-Eligible Expenses

Understanding non-eligible expenses is important, as using HSA funds for them can lead to tax consequences. Generally, expenses that do not primarily promote the proper function of the body or prevent/treat illness are not covered. Common examples include general health products like toothpaste, toiletries, and cosmetics. Nutritional supplements, such as vitamins, are not covered unless specifically prescribed by a doctor to treat a diagnosed medical condition.

Elective cosmetic procedures, like teeth whitening, hair removal, or face-lifts, are not eligible unless necessary to correct a deformity resulting from a congenital abnormality, personal injury, or disfiguring disease. Gym memberships are also excluded, unless a physician provides a letter of medical necessity for a specific medical condition or treatment.

Using your HSA card for non-eligible expenses results in the amount being considered taxable income. If you are under age 65, these distributions are also subject to an additional 20% tax penalty. For instance, a $500 non-qualified expense could incur a $100 penalty in addition to being taxed as regular income. Verify expense eligibility to avoid unexpected financial penalties.

Maintaining Records

Even with direct payment, maintaining thorough records of all HSA transactions is important. The IRS requires documentation to prove that distributions were exclusively used for qualified medical expenses. This documentation is necessary in case of an audit, as the IRS may request evidence to substantiate your claims.

Essential records include receipts, invoices, and Explanation of Benefits (EOB) statements, which demonstrate expenses were not reimbursed from another source. For over-the-counter medications or specific treatments, retain prescriptions or letters of medical necessity from a doctor. Keep these records with your tax documents for at least as long as your income tax return is subject to an audit, typically several years.

Many HSA providers offer online portals or apps to upload and store digital copies of receipts, simplifying record-keeping. Alternatively, organizing physical files or using spreadsheets can help track all HSA activity. Proper record maintenance helps avoid potential tax issues, including penalties, should the IRS question the eligibility of distributed funds.