You can spend HSA money on medical expenses your insurance doesn't cover, and on some things your insurance does cover but you want to pay for separately

An HSA works like a checking account for medical costs. Money you put in stays yours, grows tax-free if invested, and you can withdraw it to pay for medical, dental, or vision expenses without owing taxes on that withdrawal. The catch: you can only spend it on things the IRS considers medical expenses. Spend it on something that doesn't may have access to, and you owe income tax on that withdrawal plus a 20% penalty.

The IRS publishes a list of what counts. It includes obvious things—doctor visits, prescriptions, hospital stays—and less obvious ones like acupuncture, hearing aids, and the cost of a wig for hair loss from medical treatment. It does not include cosmetic procedures, gym memberships, or over-the-counter vitamins unless a doctor prescribes them in writing.

Key Takeaways

  • You can spend HSA money on any medical, dental, or vision expense, whether your insurance covers it or not.
  • Over-the-counter medications and supplies (pain relievers, bandages, cold medicine) count only if you have a doctor's written prescription or letter stating medical necessity.
  • Cosmetic procedures, gym memberships, and general wellness products do not count, even if they improve your health.
  • Keep receipts and documentation for every HSA withdrawal; the IRS can audit your account up to seven years later.
  • You can withdraw money at any time, but if you spend it on non-medical expenses before age 65, you pay income tax plus a 20% penalty on that amount.

Medical expenses you can pay for with your HSA

Doctor visits, urgent care, emergency room, surgery, hospital stays, and lab work all count. So do prescription medications, insulin, and medical devices like blood glucose monitors or CPAP machines. If your insurance covers it, you can use your HSA to pay your share—copays, coinsurance, deductibles. If your insurance doesn't cover it, you can still use your HSA as long as the expense is medically necessary.

Mental health treatment counts: therapy, psychiatry, inpatient rehab for addiction. Physical therapy, occupational therapy, and speech therapy count. Dental work—fillings, root canals, crowns, orthodontia—counts. Vision expenses count: eye exams, glasses, contact lenses, laser eye surgery. Hearing aids and hearing tests count. Chiropractic care, acupuncture, and naturopathy count if a licensed practitioner provides them.

Some less common expenses may have access to too: the cost of a guide dog for a blind person, a wheelchair or crutches, a wig for hair loss from chemotherapy, breast reconstruction after mastectomy, and fertility treatments including IVF. Nursing home care counts if the primary reason for admission is medical, not just custodial. Home modifications for disability—a wheelchair ramp, grab bars, widened doorways—count if a doctor documents the medical need.

Over-the-counter items: when they count and when they don't

Over-the-counter pain relievers, cold medicine, allergy medicine, antacids, and first-aid supplies do not automatically count. Starting in 2020, the IRS changed the rule: you can only use HSA money for OTC items if you have a doctor's written prescription or a letter from your doctor stating that the item is medically necessary for your condition.

A prescription means your doctor writes it out by name and dosage, the same way they would for a prescription drug. A letter of medical necessity is simpler: your doctor writes a note saying something like "Patient has chronic migraines and needs ibuprofen 400mg daily for treatment." You keep that letter with your HSA records. Without one or the other, the purchase does not count, and you cannot use your HSA to pay for it.

Vitamins and supplements fall into the same category. A multivitamin for general health does not count. A vitamin prescribed by your doctor for a specific deficiency—vitamin D for osteoporosis, B12 injections for pernicious anemia—counts if you have the prescription or letter.

What does not count, even if it helps your health

Cosmetic procedures do not count unless they are reconstructive—meaning they repair damage from injury, disease, or surgery. Botox, dermal fillers, teeth whitening, and elective nose jobs do not count. Breast augmentation does not count. Hair transplants do not count. But reconstructive surgery after an accident, cancer treatment, or burn injury does count.

Gym memberships, fitness classes, and exercise equipment do not count, even if your doctor recommends exercise. Nutritional counseling for general wellness does not count. Weight-loss programs do not count unless they treat a specific disease like diabetes or heart disease, and even then only the medical component counts, not the membership fee.

Cosmetic dental work—teeth whitening, veneers, bonding for appearance—does not count. Orthodontia for adults counts because it is considered a medical treatment, not cosmetic. Sunscreen, skincare products, and toiletries do not count. Maternity clothes, prenatal vitamins (unless prescribed for a deficiency), and childbirth classes do not count, though the actual delivery and prenatal care do.

How to document your HSA spending

Keep every receipt, invoice, and explanation of benefits (EOB) from your insurance. If you use your HSA debit card at a pharmacy or doctor's office, that transaction is recorded by your HSA provider, but you should still keep the receipt to match it against your account statement. If you pay out of pocket and reimburse yourself from your HSA later, keep the original receipt and your reimbursement request.

For prescriptions and letters of medical necessity, keep the original document. Photograph it or scan it if your HSA provider has an online portal where you can upload supporting documents. Some providers ask you to submit documentation when you withdraw money; others only ask if they audit your account later. Either way, the IRS can request documentation up to seven years after you make a withdrawal.

If you cannot produce a receipt or documentation, the IRS can deny the deduction and charge you income tax plus the 20% penalty on that withdrawal. The burden is on you to prove the expense was medical and that you actually incurred it.

Withdrawing money: timing and penalties

You can withdraw money from your HSA at any time. There is no waiting period, no approval process. You can use your HSA debit card at the pharmacy or doctor's office, or you can request a reimbursement check from your HSA provider. The money is yours to use.

If you withdraw money and spend it on a non-medical expense before age 65, you owe income tax on that amount plus a 20% penalty. That penalty is separate from the income tax—it is an additional cost for misusing the account. After age 65, you can withdraw money for any reason without the 20% penalty, but you still owe income tax on non-medical withdrawals.

If you withdraw money for a medical expense and later find out that expense does not count, you have the same problem: income tax plus 20% penalty. This is why documentation matters. If you are unsure whether an expense counts, ask your HSA provider or check the IRS publication on medical expenses before you withdraw the money.

Frequently Asked Questions

Can I use my HSA to pay for my spouse's or child's medical expenses?

Yes, as long as they are your dependent for tax purposes. You can use your HSA to pay for your spouse's medical expenses even if they are not on your health plan. You can use it for your children's medical expenses if they are your dependents, even after they turn 18 and move out, as long as you claim them on your taxes.

What if I use my HSA debit card and the transaction turns out to be non-medical?

You owe income tax plus a 20% penalty on that withdrawal. If you realize the mistake quickly, some HSA providers allow you to reverse the transaction or deposit the money back within a short window. After that, you are liable for the tax and penalty. This is why it is important to only use your HSA debit card at medical providers and pharmacies.

Can I use my HSA to pay for dental implants or cosmetic dentistry?

Dental implants count as a medical expense because they restore function, not just appearance. Cosmetic dental work—whitening, veneers, bonding for looks—does not count. If you are unsure whether a specific procedure is considered cosmetic or functional, ask your dentist to document the medical reason for the work, then check with your HSA provider before you proceed.

Do I have to spend my HSA money every year, or can I save it?

You can save it indefinitely. Unlike a Flexible Spending Account (FSA), an HSA does not have a "use it or lose it" rule. Money you do not spend stays in your account, grows if you invest it, and remains available to you for medical expenses in future years. You can accumulate a large balance over time.

What happens to my HSA if I change jobs or lose my health insurance?

Your HSA stays yours. You own the account and the money in it, regardless of your employment status or which health plan you have. If you leave your job, you can keep your HSA open and continue to use it for medical expenses. If you switch to a different health plan, you can still use your HSA as long as your new plan is HSA-compatible.