What an HSA covers: the basic rule

An HSA pays for may have access to medical expenses — a specific list set by the IRS. The rule is simple: if it treats, manages, or prevents a medical condition, and a doctor or dentist would normally charge for it, you can usually pay for it with HSA money. Prescriptions, doctor visits, dental work, vision care, and medical equipment all count. Non-medical items do not, even if they might help you feel better.

The IRS publishes a full list, but the practical test is whether the expense is primarily medical in nature. A wheelchair is covered. A gym membership is not, even if your doctor recommends exercise. A prescription for glasses is covered. Over-the-counter reading glasses are not, unless you have a prescription for them.

If you spend HSA money on something that is not a may have access to expense, you owe income tax on that amount plus a 20 percent penalty. The money comes out of your account either way, but the tax and penalty make it expensive. Keep receipts and know the rules before you pay.

Key Takeaways

  • Prescriptions, copays, deductibles, dental work, vision care, and medical equipment are covered by HSA funds.
  • Over-the-counter medicines and supplements require a doctor's prescription to be covered, with rare exceptions for insulin.
  • Cosmetic procedures, gym memberships, and general wellness products are not covered, even if recommended by a doctor.
  • Spending HSA money on non-may have access to expenses triggers income tax plus a 20 percent penalty on the amount spent.
  • You can use HSA funds to pay for a spouse or dependent's medical expenses, even if they are not on your health plan.

Medical expenses you can pay for

Doctor visits, urgent care, and emergency room charges are covered. This includes the copay, the deductible, and any coinsurance you owe after insurance pays its share. Prescription medications are covered. Over-the-counter drugs like ibuprofen or cold medicine are not covered unless you have a written prescription from a doctor — insulin is the one exception and is always covered.

Dental work is covered: cleanings, fillings, root canals, extractions, and orthodontia all count. Vision care is covered: eye exams, glasses, contact lenses, and laser eye surgery (LASIK) are all may have access to expenses. Hearing aids and batteries are covered. Medical equipment like crutches, wheelchairs, blood pressure monitors, and glucose meters are covered. Mental health treatment, including therapy and psychiatric medication, is covered.

Certain medical supplies are covered: bandages, first aid kits, heating pads, ice packs, and compression wraps. Pregnancy tests and contraception are covered. Fertility treatment, including IVF and related procedures, is covered. Long-term care insurance premiums are covered under specific rules. Nursing home care is covered if it is primarily for medical reasons, not just housing.

Over-the-counter items with and without a prescription

The rule changed in 2020. Before that year, you could buy most over-the-counter medicines and supplies with HSA money. Now you cannot — unless you have a doctor's written prescription. A prescription does not have to be filled at a pharmacy; your doctor can write one for over-the-counter ibuprofen, and then you can buy it with HSA funds. Without the prescription, you cannot.

Insulin is the exception. You can buy insulin over the counter with HSA money without a prescription. For everything else — pain relievers, cold medicine, allergy medicine, antacids, laxatives — you need a prescription. First aid supplies like bandages and gauze are covered without a prescription because they are not drugs. Sunscreen is not covered. Toothpaste is not covered. Vitamins and supplements are not covered unless prescribed by a doctor for a specific medical condition.

The prescription does not have to be current. If your doctor wrote you a prescription for ibuprofen three years ago, you can still use it to buy ibuprofen with HSA money today. Keep the prescription with your records in case the IRS asks.

What is not covered

Cosmetic procedures are not covered unless they are medically necessary. Botox for wrinkles is not covered. Botox for migraines prescribed by a neurologist is covered. Teeth whitening is not covered. A crown to repair a broken tooth is covered. Hair transplants for baldness are not covered. Hair removal for a skin condition is covered if medically necessary.

Gym memberships and fitness classes are not covered, even if your doctor recommends exercise. Weight loss programs are not covered unless they treat a specific disease like diabetes or heart disease, and even then only the medical portion is covered, not the general fitness part. Nutritional counseling is covered if prescribed by a doctor for a medical condition. General diet advice is not.

Cosmetic dentistry like teeth whitening or veneers is not covered. Orthodontia for cosmetic reasons is not covered (though it is covered if medically necessary). Elective procedures are not covered. Maternity clothes are not covered. Diapers are not covered. Childcare is not covered. Nursing home care is covered only if the primary reason is medical, not just housing or personal care.

Using HSA money for family members

You can use your HSA to pay for medical expenses of your spouse and dependents, even if they are not on your health plan. Your spouse does not have to be covered by the same insurance. Your dependent does not have to be a child — an adult parent or other relative you claim on your taxes counts as a dependent for HSA purposes.

You do not need to be married to use HSA money for a spouse's expenses, but the IRS definition of spouse is narrow: it means someone you are legally married to. Domestic partners and unmarried partners do not count, even if you file taxes together or have a legal partnership agreement. Dependents must be people you claim on your federal tax return.

Keep receipts that show whose expense it was. If you pay for your parent's dental work, keep the receipt from the dentist showing your parent's name and the date of service. The IRS does not require you to prove the relationship every time, but if you are audited, you will need to show that the person was your spouse or dependent in the year you spent the money.

HSA spending after age 65

After you turn 65, the rules change slightly. You can still use HSA money for may have access to medical expenses without penalty. But if you withdraw money for non-medical reasons, you only owe income tax — the 20 percent penalty goes away. This makes an HSA function more like a retirement account after 65, though it is still most valuable when used for medical expenses.

Medicare premiums are a special case. You can use HSA money to pay for Medicare Part B and Part D premiums after you turn 65. You cannot use it for Medicare supplement (Medigap) premiums. Long-term care insurance premiums are covered up to a yearly limit that changes each year.

Keeping records and avoiding penalties

The IRS does not require you to submit receipts when you use your HSA, but you must keep them. If you are audited, you need to show that the money went to may have access to medical expenses. A receipt from a pharmacy, doctor's office, or medical supplier is your proof. A credit card statement alone is not enough — you need documentation of what was actually purchased.

If you spend HSA money on something that turns out not to be covered, you have options. You can withdraw the money from your HSA and pay the income tax and 20 percent penalty. Or you can leave it in the account and treat it as a non-may have access to withdrawal, which means you owe tax and penalty but the money stays in your HSA. Either way, the penalty applies once, not every year.

Some HSA providers offer a debit card that lets you pay directly from your HSA at the point of sale. Be careful with these cards — if you use them for non-may have access to expenses, you will owe the penalty. Keep your receipts even when you use the card, because the card company does not track what you bought, only that you spent money at a particular merchant.

Frequently Asked Questions

Can I use my HSA to pay for my pet's medical care?

No. Veterinary expenses are not may have access to medical expenses under IRS rules, even if your pet is a service animal. If your pet is a service dog that performs medical tasks like alerting you to seizures, the dog's training and equipment might be covered under different rules, but routine veterinary care is not.

Is acupuncture covered by an HSA?

Yes, if it is prescribed by a doctor for a medical condition. Acupuncture for general wellness or stress relief is not covered. Acupuncture for chronic pain, nausea, or a specific diagnosed condition is covered if your doctor orders it as treatment.

Can I use HSA money to pay for therapy or counseling?

Yes. Mental health treatment, including therapy, counseling, and psychiatric medication, is a may have access to medical expense. This includes therapy for depression, anxiety, PTSD, and other mental health conditions. The therapist does not have to be a psychiatrist — licensed therapists and counselors count.

What happens if I accidentally spend HSA money on something not covered?

You owe income tax on that amount plus a 20 percent penalty. If you spent $100 on a non-may have access to expense, you owe tax on $100 plus $20 in penalty. You cannot get the money back into your HSA. The best approach is to ask your HSA provider or a tax professional before spending on anything you are unsure about.

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

Only if you claim them as a dependent on your federal tax return. If your adult child is independent and you do not claim them, you cannot use your HSA for their medical expenses. If you do claim them as a dependent, you can use your HSA to pay for their care.