What an HSA covers: the IRS list and what it means in practice

An HSA covers medical expenses that treat, diagnose, or prevent a disease or condition. The IRS publishes a list of thousands of approved items, but the rule is simpler than the list: if a doctor prescribes it or it treats a medical problem, it usually qualifies. Vitamins don't count unless they treat a specific deficiency. Gym memberships don't count. A blood pressure monitor does.

The key is that the expense has to be for you, your spouse, or a dependent you claim on your taxes. You can't use HSA money for someone else's medical care, even a family member you help support but don't claim as a dependent. The money stays in your account year to year—it doesn't disappear on December 31—so you can save it for future medical costs or even retirement.

Receipts matter. The IRS doesn't require you to submit them when you withdraw money, but you need to keep them for seven years in case of an audit. If you can't prove an expense was medical, the IRS can treat the withdrawal as taxable income plus a 20 percent penalty.

Key Takeaways

  • HSA money covers doctor visits, prescriptions, dental work, vision care, and medical equipment like crutches or glucose monitors, but not cosmetic procedures or over-the-counter drugs without a prescription.
  • You can use HSA funds to pay insurance premiums in specific situations: COBRA continuation coverage, long-term care insurance, and health insurance while unemployed, but not regular monthly premiums for your current plan.
  • Expenses for your spouse and tax dependents count, but not for family members you support but don't claim on your tax return.
  • Keep receipts for seven years; the IRS can penalize withdrawals for non-medical expenses at 20 percent plus income tax.
  • Unused HSA money rolls forward every year and can be invested like a retirement account once you have enough to meet your plan's minimum.

Doctor visits, prescriptions, and basic medical care

Copays, coinsurance, and deductibles for doctor visits all come out of your HSA. So do prescription medications, whether you fill them at a pharmacy or by mail order. Over-the-counter drugs like ibuprofen or allergy medicine don't count unless your doctor writes a prescription for them—the prescription is what makes them HSA-may be able to access, not the drug itself.

Mental health and addiction treatment are covered the same way as physical health: therapy sessions, psychiatrist visits, and inpatient rehab all may have access to. Fertility treatments, including IVF and medications, are HSA-may be able to access. So are costs for abortion care in states where it is legal.

Lab work and diagnostic imaging—blood tests, X-rays, MRIs, ultrasounds—all may have access to. If you pay out of pocket for a test your insurance doesn't cover, or you use an HSA to cover the out-of-pocket portion after insurance pays its share, both are legitimate HSA expenses.

Dental, vision, and hearing care

Dental work is fully HSA-may be able to access: cleanings, fillings, root canals, crowns, extractions, and orthodontia all count. Cosmetic dental work—whitening, veneers for appearance only—does not. If your dentist can document that a procedure corrects a functional problem (a crown that restores chewing ability, for example), it may may have access to even if appearance improves.

Vision care includes eye exams, glasses, contact lenses, and contact solution. Laser eye surgery (LASIK and similar procedures) qualifies. Sunglasses do not, even if you have a prescription, because they are considered cosmetic.

Hearing aids and related care are HSA-may be able to access. Hearing tests, fitting, repairs, and replacement batteries all count. Cochlear implants and related surgery may have access to as well.

Medical equipment and supplies you can buy with HSA funds

Durable medical equipment—crutches, wheelchairs, walkers, canes, braces, and orthopedic shoes—all may have access to. Glucose monitors and test strips for diabetes management are HSA-may be able to access. Bandages, gauze, and first-aid supplies count. Heating pads, ice packs, and compression sleeves may have access to if they treat a specific medical condition (not general wellness).

Pregnancy-related supplies are covered: maternity support garments, fetal heart monitors, and breast pumps all may have access to. Incontinence supplies and ostomy supplies are HSA-may be able to access. Crutches, canes, and walkers for temporary or permanent mobility issues count.

Medical alert systems and devices that monitor chronic conditions may have access to. Pulse oximeters, blood pressure monitors, and weight scales for medical tracking are HSA-may be able to access. Humidifiers and nebulizers used to treat respiratory conditions count, but a humidifier for general comfort does not.

What does not may have access to: common exclusions and gray areas

Cosmetic procedures—facelifts, Botox, hair removal, teeth whitening for appearance—are not HSA-may be able to access. Cosmetic surgery to correct a birth defect or injury may may have access to; cosmetic surgery for appearance alone does not. If you're unsure, ask your doctor to document the medical reason in writing.

General wellness expenses don't may have access to: gym memberships, vitamins (unless prescribed for a deficiency), supplements, and weight-loss programs are not HSA-may be able to access. Sunscreen and insect repellent are not covered. Maternity clothes are not, but maternity support garments prescribed by a doctor are.

Over-the-counter pain relievers, allergy medicine, and cold medicine don't count unless prescribed. Marijuana, even in states where it is legal, is not HSA-may be able to access under federal law. Fertility treatments that don't involve medical intervention—such as ovulation tracking apps—don't may have access to, but the medical procedures and medications do.

Long-term care insurance premiums are HSA-may be able to access, but regular health insurance premiums for your current plan are not. COBRA premiums, premiums while you're unemployed, and Medicare premiums (once you're 65) do may have access to.

Using HSA money for insurance premiums and out-of-pocket costs

You can pay COBRA continuation coverage premiums from your HSA if you lose employer coverage. You can also use HSA funds to pay health insurance premiums while you're unemployed and receiving unemployment benefits. Once you turn 65, you can use your HSA to pay Medicare Part B and Part D premiums, as well as long-term care insurance premiums.

You cannot use HSA money to pay the monthly premiums for your current employer or individual health plan. You can use it for the out-of-pocket costs that plan creates—copays, deductibles, coinsurance—but not the premium itself.

If you have multiple insurance plans, you can use HSA funds to cover out-of-pocket costs from any of them. If you're covered under your spouse's plan and also have your own HSA, both of you can use the same HSA to pay your respective out-of-pocket costs.

How to spend HSA money and what records you need to keep

Most HSAs come with a debit card you can use at pharmacies, doctor's offices, and medical suppliers. Some require you to pay out of pocket and then submit a receipt for reimbursement. A few allow you to request a check. Check your plan documents to see which method applies to you.

When you use the debit card, the transaction is usually flagged as medical, but the merchant codes aren't perfect—a pharmacy might code as retail, for example. Keep your receipt anyway. If you pay out of pocket and request reimbursement, submit the receipt with your request.

The IRS doesn't require you to submit receipts when you withdraw money, but you must keep them for seven years. If you're audited and can't produce a receipt, the IRS can treat the withdrawal as taxable income plus a 20 percent penalty. Store receipts digitally or in a folder; a photo of the receipt counts.

Frequently Asked Questions

Can I use my HSA to buy over-the-counter pain relievers or allergy medicine?

Not without a prescription. Ibuprofen, acetaminophen, antihistamines, and decongestants don't may have access to as HSA expenses unless your doctor writes a prescription for them. The prescription is what makes them may be able to access, even if you buy the exact same product at the pharmacy.

Can my spouse use my HSA if we file taxes jointly?

Yes. If you're married and file jointly, your spouse can use your HSA to pay for their own medical expenses. You can also use it for their expenses. Both of you are considered covered under the HSA for IRS purposes.

What happens if I use my HSA for something that's not medical?

If you withdraw money for a non-medical expense before age 65, you owe income tax on that amount plus a 20 percent penalty. After age 65, you owe income tax but not the penalty. Keep receipts to prove expenses were medical if the IRS asks.

Can I use my HSA to pay for my gym membership if my doctor says I need to exercise?

No. Even with a doctor's recommendation, gym memberships and fitness classes are not HSA-may be able to access. You can use HSA funds for medical equipment (a stationary bike for physical therapy, for example) or for physical therapy sessions themselves, but not for general fitness.

Do I lose my HSA money if I don't use it by the end of the year?

No. Unlike a flexible spending account (FSA), HSA money rolls forward year to year. You can save it indefinitely and use it whenever you have a medical expense. Once you have enough in the account, you can invest it like a retirement account.