Where Can I Use My HSA Debit Card?

A Health Savings Account (HSA) debit card provides a convenient way to access funds within your HSA, which is a tax-advantaged savings account designed for healthcare expenses. This card functions much like a standard debit card, allowing direct payment for eligible medical costs.

Understanding Eligible Medical Expenses

Funds in a Health Savings Account (HSA) are specifically designated for eligible medical expenses as defined by the Internal Revenue Service (IRS). These expenses must be primarily for the diagnosis, cure, mitigation, treatment, or prevention of disease, or for the purpose of affecting any structure or function of the body.

Common eligible expenses include visits to general practitioners and specialists, prescription medications, and dental care such as cleanings, fillings, and even orthodontia. Vision care is also covered, encompassing eye exams, prescription glasses, contact lenses, and corrective procedures like laser eye surgery. Mental health services, including therapy and psychiatric care, are considered eligible expenses.

Hospital services, including inpatient care, surgical procedures, and facility fees, can be paid for with your HSA debit card. Diagnostic services, such as laboratory tests and X-rays, are also eligible. Additionally, medical equipment like crutches, wheelchairs, and blood sugar monitors qualify as eligible expenses.

The Coronavirus Aid, Relief, and Economic Security (CARES) Act expanded the list of eligible expenses to include certain over-the-counter (OTC) items without requiring a prescription. This means items such as pain relievers, cold and flu medication, menstrual care products, and bandages can be purchased with an HSA debit card. Other qualifying expenses include acupuncture and chiropractic care, as well as smoking cessation programs if they are medically necessary.

Common Ineligible Expenses

While a wide range of medical costs qualify for HSA use, certain expenses are generally considered ineligible by the IRS and cannot be paid for with an HSA debit card. Using your HSA debit card for ineligible expenses can result in taxes and penalties.

Cosmetic procedures, unless medically necessary, are typically not covered. General health items that are not primarily for medical care, such as toiletries, general dietary supplements, or vitamins for overall wellness, are also ineligible. Gym memberships or health club dues for general fitness purposes do not qualify.

Items like toothpaste, maternity clothes, diapers, are usually excluded because they are not considered medical care. While health insurance premiums are generally not eligible, there are limited exceptions. These exceptions include premiums for COBRA continuation coverage, qualified long-term care insurance, and Medicare premiums (Parts A, B, D, and Medicare HMO).

Using Your HSA Debit Card for Purchases

Using your Health Savings Account (HSA) debit card for eligible medical expenses is similar to using a regular debit card. The card can be swiped, inserted, or tapped at point-of-sale terminals, or the card details can be entered for online purchases.

Your HSA debit card is widely accepted at doctor’s offices, hospitals, pharmacies, vision centers, and dental clinics. Some grocery stores and general retailers with health sections may also accept the card, particularly if they utilize an Inventory Information Approval System (IIAS). This system helps identify eligible medical products at the point of sale, ensuring compliance with IRS guidelines.

It is your responsibility to ensure that any purchases made with your HSA debit card are for eligible medical expenses. You should keep all receipts and other documentation for these purchases. This documentation is crucial for substantiation in case the IRS requests verification of your medical expenses during an audit.

If an ineligible expense is accidentally paid for with your HSA debit card, you must reimburse the HSA for that amount. Failure to repay the account for ineligible purchases can lead to the amount being considered a taxable distribution. This may also incur an additional 20% penalty if you are under age 65.