Plus, unused funds roll over annually, so you never lose what you’ve saved. The CARES Act expanded the list of purchases allowed with HSA money to include menstrual care products and over-the-counter drugs.
HSAs make managing health costs both efficient and financially wise through their tax advantages. As part of broader equity in health financing, HSAs empower individuals with high-deductible plans to access care without facing excessive out-of-pocket costs
What Is an HSA?
An HSA is a tax-advantaged account designed for people with a High Deductible Health Plan (HDHP). The goal is to help you cover out-of-pocket medical expenses.
To qualify, you must:
- Have an HDHP.
- Not be enrolled in Medicare.
- Not be listed as someone else’s dependent.
The money you contribute doesn’t expire and can also be used for your family’s qualified medical expenses. Understanding what are eligible HSA expenses is key to avoiding unnecessary taxes or penalties.
Why Understanding Eligible Expenses Matters
Spend your HSA funds on non-qualified items, and you’ll pay regular income tax plus a 20% penalty (if you’re under 65). To stay compliant, report all non-medical spending on IRS Form 8889.
Knowing what counts as eligible HSA expenses helps you make smarter choices, avoid tax trouble, and stretch your healthcare dollars further.
Planning Benefits
Proper HSA planning complements the broader landscape of healthcare financial management services, where effective oversight leads to better outcomes and financial efficiency. Always save your receipts, prescriptions, and doctor’s notes in case the IRS asks for proof. Good recordkeeping ensures every dollar you spend supports your health without surprises come tax season.
Reimbursement Rules & Recordkeeping
To get reimbursed from your HSA, you’ll need documentation. Keep receipts and medical records for at least 3 to 7 years. These serve as proof your expenses qualify under IRS rules, ensuring smooth audits and tax reporting.
List of Common HSA Eligible Expenses
Knowing which expenses your HSA covers can save you money. Here are where you can use your HSA funds, from doctor visits to prescription meds.
Doctor Visits & Medical Services
Routine check-ups, specialist visits, acupuncture, and chiropractic care are covered. Always confirm if a service qualifies before spending.
Dental Care
From cleanings to x-rays, most dental services are HSA eligible expenses. These preventive services save money long-term by catching issues early.
Vision Care
Eye exams, glasses, contact lenses, LASIK, and even safety goggles can be paid for with HSA funds. Check your provider’s eligible expense list to be sure.
Prescription Medications
Both prescription and over-the-counter medications are covered—even painkillers and allergy relief—as long as they qualify under IRS rules.
Mental Health Services
Therapy and counseling for diagnosed conditions are eligible. You might need a doctor’s note for reimbursement, so keep all supporting documents.
Medical Equipment
Crutches, hearing aids, face masks, oxygen equipment, and TENS machines all qualify. Many COVID-related items, like PPE and test kits, are included too.
Lab Tests & Imaging
Blood work, MRIs, PET scans, and ultrasounds are HSA-approved. When in doubt, check with your provider to confirm eligibility.
Hospital Services
Hospital stays, surgeries, and emergency visits are standard HSA eligible expenses. Use your funds to reduce high out-of-pocket hospital bills.
Less Obvious HSA Eligible Expenses
You might find it surprising, but your HSA can cover unexpected costs like acupuncture and travel expenses for medical care. These benefits support alternative payment models in healthcare by giving patients more control and flexibility in how they fund necessary services.
Acupuncture
Covered if prescribed by a doctor. Make sure to have a note stating the treatment is medically necessary.
Chiropractic Care
Also eligible when medically required. Treatments for general wellness aren’t covered, so documentation is essential.
Menstrual Care Products
Tampons, pads, and other menstrual products are now eligible, thanks to the CARES Act.
Smoking Cessation Programs
Programs and products like nicotine patches or gum are reimbursable with a doctor’s prescription.
COVID-19 Test Kits & PPE
Home tests and protective gear like masks are reimbursable if not already covered by your health plan.
Travel Costs for Medical Treatment
If you travel for care, your HSA can cover transportation. Just track your mileage since the IRS updates the rate yearly.
Expenses That Are NOT HSA Eligible
Figuring out what you can’t use your HSA for is just as important. Here are some expenses that are off-limits and how to make the most of your HSA.
- Cosmetic Procedures: Elective treatments for appearance aren’t covered. Surgeries required for medical reasons may qualify, so always check first.
- Gym Memberships: Generally not allowed. However, if your doctor recommends exercise for a specific medical condition, HSA funds may apply—with documentation.
- Over-the-Counter Drugs Without a Prescription: Since 2020, many OTC meds no longer require a prescription for HSA use. But always verify they’re approved.
- General Wellness Products: Items like vitamins or toothpaste are only covered if prescribed for a diagnosed condition. Otherwise, they don’t qualify.
How to Verify HSA Eligibility for a Specific Expense
Refer to IRS Publication 502 to see if a cost is considered a qualified medical expense. You can also use tools like the HSA Store’s eligibility checker or check with your HSA bank.
If an item isn’t clearly eligible, you may need a Letter of Medical Necessity from your doctor explaining why it’s required for your treatment.
HSA Expense Tracking and Documentation Tips
Maintaining detailed documentation of HSA expenses is a vital practice for account holders.
- Save everything: Keep receipts, prescriptions, and doctor’s notes.
- Use digital tools: Most HSA banks offer mobile apps to organize and store your records.
- Keep records 3–7 years: This protects you during IRS audits or reimbursement issues.
Changes in HSA Eligible Expenses Over Time
The CARES Act expanded eligible HSA expenses, removing the need for prescriptions for OTC drugs and adding menstrual products to the list. These changes help users manage costs more easily. Make sure to stay updated on IRS rules since they change yearly. A yearly check-in with a tax advisor can help you make the most of your HSA.
Frequently Asked Questions (FAQs)
Can I use my HSA to pay for a family member’s medical expenses?
Yes, you can use HSA funds for your spouse, dependents, or anyone you claim on your taxes, even if they are not covered under your HDHP.
Are over-the-counter medications HSA eligible?
Only if prescribed by a doctor, unless covered under special provisions like the CARES Act.
What happens if I accidentally use HSA funds for a non-qualified expense?
You’ll owe income tax on the amount and a 20% penalty unless you’re 65 or older.
Do HSA eligible expenses change every year?
Yes, some items may be added or removed annually by the IRS. Always consult the latest guidelines.
Can I reimburse myself for past expenses?
Yes, as long as the expense occurred after the HSA was opened and you have proof of payment and eligibility.
References
Internal Revenue Service. (2025, January 23). Publication 969 (2023), Health savings accounts and other tax-favored health plans. U.S. Department of the Treasury. https://www.irs.gov/publications/p969
Cigna. (n.d.). HSA, FSA, and HRA eligible expenses. https://www.cigna.com/individuals-families/member-guide/eligible-expenses
Sparer, M. S. (2020). Moving toward equity in health care finance: A national and global imperative. The American Journal of Public Health, 110(9), 1306–1308. https://pmc.ncbi.nlm.nih.gov/articles/PMC7368175/
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