Home Passive Income HSA Qualified Expenses: Find Out What's Included

Passive Income

HSA Qualified Expenses: Find Out What's Included

July 17, 2024

Create your very own Auto Publish News/Blog Site and Earn Passive Income in Just 4 Easy Steps

HSA-qualified expenses are the items you can claim as tax-free withdrawals of funds from your health savings account.

Healthcare expenses can have serious negative effects on your finances, especially if the costs are unexpected.

Fortunately, with a Health Savings Account (HSA), you can plan ahead and set aside money for future medical expenses before taxes.

But how do you know which medical expenses are reimbursable under HSA rules? This article provides a list of common reimbursable expenses and some non-reimbursable expenses. We also explain how the HSA works and answer some frequently asked questions.

What is an HSA account?

A health savings account is a tax-advantaged savings account that helps you save for future healthcare expenses. You can withdraw money tax-free from your HSA to cover qualified medical bills, deductibles, copayments, and other expenses not covered by your health insurance. But always check before making withdrawals, as non-qualified withdrawals are subject to income taxes (more on that later).

Who can contribute to an HSA plan?

Not everyone is eligible to contribute to an HSA. To qualify, you must meet the following requirements:

You must have a High Deductible Health Plan (HDHP)*
You must not have other health insurance (usually a requirement for HDHP)
You cannot be enrolled in Medicare
You cannot be listed as a relative on another person's tax return

*HDHPs have higher deductibles than traditional insurance plans, so the plan holder is responsible for more out-of-pocket costs before insurance kicks in.

Common HSA-Qualified Expenses

Withdrawing money from a health savings account to pay for qualified medical expenses can help you lower your health care costs while enjoying some tax benefits. Here is a list of some common HSA-eligible medical expenses. For a more complete list, see IRS Publication 502.

Medical service

Acupuncture: You can include money for acupuncture treatments.
Ambulance: You can include the costs for medical transport.
Chiropractic Services: Chiropractic treatments such as spinal adjustments and therapeutic massage may be included.
Dental services: Routine and specialized dental care, including cleanings, fillings, crowns and orthodontic work, is included.
Doctors’ fees: Fees for visits to primary care physicians, specialists and surgeons.
Hospital services: Includes costs for surgery, x-rays, lab tests, and emergency room visits.
Long-term care services: Must be needed by a chronically ill person and prescribed by a licensed healthcare professional.
Psychiatric services: Includes counseling and therapy, substance abuse treatment, and psychiatric consultations.
Visual aids: Includes eye exams, glasses and contact lenses.

Prescription and non-prescription drugs

Birth control pills: You can claim the amount you pay for the tablets prescribed by your doctor.
Prescription drugs: Medicines prescribed by a doctor, such as antibiotics, insulin, and blood pressure medications.

Medical supplies and equipment

Diagnostic devices: They may include devices for diagnosing various diseases, such as blood glucose meters and blood pressure monitors.
Durable medical devices: Includes wheelchairs, walkers and CPAP machines.
First aid equipment: You can bring basic first aid items for home use, including bandages, gauze, antiseptic ointments and thermometers.
Hearing aids: Includes hearing aids, hearing aid batteries.
Insulin supply: Syringes, syringes, insulin pumps are included.

Preventive care

imaginations: Routine exams and preventive medical tests, including mammograms, colonoscopies and prostate exams, are HSA eligible.
Vaccinations: Money spent on vaccinations and booster shots may be reimbursed under HSA rules. These include flu and tetanus shots, as well as the HPV vaccine.

Medical procedures

Breast reconstruction surgery: The cost of breast reconstruction surgery, including a breast prosthesis following a mastectomy for cancer, is considered HSA-eligible.
Eye surgery: If you have had corrective eye surgery, such as laser surgery or radial keratotomy, you can cover the cost with HSA funds.
Operations: Medical expenses incurred for legal action (excluding cosmetic surgery) are considered HSA-eligible expenses.
Transplants: If you are a donor or potential donor of a kidney or other organ, you may include medical expenses incurred for related medical care.

Arrival and accommodation

Transport: Travel costs incurred for medical care are eligible for reimbursement. Examples of these include travel costs for buses, taxis, planes, trains or taxis, as well as ambulance costs.
Accommodation: Overnight costs for external medical care are included. This includes the costs for meals and accommodation in the hospital or for a hotel stay during a longer medical treatment.
DIY work: Medically necessary home improvements such as elevators, ramps, enlarged doorways or wheelchair lifts.

Other expenses

Fertility treatments: Surgery or other procedures to assist in conception, including in vitro fertilization and egg and sperm storage, are included.
Physical therapy: Physical therapy expenses incurred to recover from an injury or surgery are considered reimbursable under HSA rules.
Smoking cessation programs: Smoking cessation treatments are included. However, you cannot claim the cost of over-the-counter aids such as nicotine gum or patches.
Weight loss programs: The cost of weight loss programs prescribed by a doctor to treat a diagnosed medical condition such as obesity, high blood pressure or heart disease may be reimbursed under HSA rules.

How do HSA refunds work?

Typically, you must pay medical expenses up front until you reach the annual deductible for your HDHP plan. You can then ask your HSA trustee to send you a tax-free withdrawal from your HSA account.

You can use these withdrawals to cover qualified medical expenses incurred after you opened your HSA account. Note that ineligible withdrawals are subject to income taxes and you may have to pay an additional 20% in taxes.

Whose medical expenses are reimbursable?

You can claim medical expenses for yourself and for a person who was your spouse or dependent at the time the medical service was received or the medical expenses were paid.

What costs are not included?

Although they can have a positive impact on your health and well-being, not all medical expenses are eligible under HSA rules. Here are some expenses that are not included:

Babysitting/Childcare
Controlled substances (e.g. marijuana)
Cosmetic surgery
Electrolysis/hair removal
Funeral services
Insurance premiums
Maternity wear '
Non-prescription medications other than insulin (e.g. aspirin, Advil)
Teeth whitening
Weight loss program (unless diagnosed and treated by a doctor)

For a complete list, see IRS Publication 502.

Bottom line

While our list includes many common expenses, it is not exhaustive. For more details on HSA rules, consult IRS guidelines or an HSA administrator. Finally, you want to make sure your expenses qualify, or you may be subject to income taxes when you withdraw HSA funds.

FAQ

Can I use my HSA for vitamins?

Over-the-counter vitamins are not considered eligible medical expenses for HSA purposes. Over-the-counter medications such as headache, flu, or cold remedies are also not included.

Can I use my HSA for glasses?

Yes. Expenses for vision care, including prescription glasses and contact lenses, are eligible.

Can I pay my health insurance premiums through my HSA?

No. Insurance premiums are not considered qualifying expenses under HSA rules.

Can I claim expenses incurred before I opened my HSA plan?

No. Medical expenses you incurred before opening your HSA are not considered qualified medical expenses for HSA purposes.

Is an Apple Watch considered a medical device for HSA purposes?

It's unlikely you'll be able to claim the cost of an Apple Watch. According to the HSA Store, a fitness tracker like a FitBit requires a doctor's note of medical necessity to be considered an HSA-eligible medical expense. You can check with your doctor about this, but you'll likely need a specific medical reason to use the fitness tracker. Even if your doctor fills out the LMN form, there's no guarantee it will be accepted.