HSA money has strict rules, but they're broader than most people think

A health savings account lets you spend money on medical expenses without paying taxes on that money. The catch is that "medical expenses" has a specific meaning under tax law — you can't use it for groceries, gym memberships, or most over-the-counter items, even if they relate to your health. But the list of what you can use it for is longer than you'd expect, and it includes things beyond doctor visits.

The IRS publishes a list of may have access to medical expenses. If an expense is on that list, you can withdraw the money tax-free. If it's not on the list, you can still withdraw the money, but you'll pay income tax on it plus a 20% penalty — which makes it an expensive way to pay for something your HSA wasn't designed to cover.

Key Takeaways

  • You can use HSA money for doctor visits, hospital stays, prescription medications, and dental and vision care without any tax penalty.
  • Many over-the-counter items like pain relievers, allergy medicine, and first aid supplies are covered, but you need a prescription or doctor's note for some of them.
  • Gym memberships, cosmetic procedures, and general wellness products are not covered, even if they improve your health.
  • If you withdraw money for a non-may have access to expense, you pay income tax plus a 20% penalty on that amount.
  • The IRS maintains a searchable database of may have access to expenses, and your HSA provider can also tell you whether a specific item qualifies.

Medical care and treatment you can pay for

The broadest category of HSA-may be able to access expenses is medical care itself. This includes doctor visits (primary care, specialists, and mental health providers), hospital stays, surgery, physical therapy, and diagnostic tests like X-rays and blood work. If a licensed healthcare provider is treating a diagnosed condition, HSA money can almost always cover it.

Prescription medications are covered without question. Over-the-counter medications are trickier: you can use HSA money for them, but only if you have a prescription from a doctor or a letter from a doctor stating that the medication treats a specific condition. A bottle of ibuprofen you buy for a headache doesn't may have access to on its own, but ibuprofen prescribed by your doctor for arthritis does. The prescription or letter has to be in writing and kept with your records.

Dental work is fully covered — cleanings, fillings, root canals, extractions, and orthodontia all count. Vision care is covered too: eye exams, glasses, contact lenses, and corrective surgery like LASIK all may have access to. Hearing aids and hearing exams are covered. Mental health treatment, including therapy and psychiatric medication, is covered.

Over-the-counter items and supplies you might not expect

Many over-the-counter items are HSA-may be able to access, but the rules vary depending on whether you have a prescription. Bandages, gauze, thermometers, blood pressure monitors, and other first aid and diagnostic supplies are covered without a prescription. Crutches, wheelchairs, and other mobility aids are covered. Pregnancy tests and contraceptive devices are covered.

Pain relievers, allergy medicine, cold medicine, antacids, and other common over-the-counter drugs are covered only if you have a prescription or a written note from a doctor. This rule changed in 2020 — before that, you could buy them without a prescription. Now, if you want to use HSA money for them, you need documentation. Some people keep a standing letter from their doctor that says they treat their seasonal allergies with a specific antihistamine, for example.

Sunscreen is not covered. Vitamins and supplements are generally not covered unless they treat a specific diagnosed deficiency (and you have a prescription). Toothpaste and mouthwash are not covered. Deodorant is not covered. These are considered general health and hygiene products rather than treatment for a medical condition.

What's not covered, even though it affects your health

Gym memberships and fitness classes are not covered, even if your doctor recommends exercise. Weight loss programs are not covered. Cosmetic procedures — including teeth whitening, Botox, and hair removal — are not covered unless they're medically necessary (for example, a skin graft after a burn is covered, but elective cosmetic surgery is not).

Long-term care insurance premiums are covered, but regular health insurance premiums are not (with a narrow exception for COBRA continuation coverage). Life insurance is not covered. Maternity clothes are not covered. A new mattress recommended by your doctor for back pain is not covered. Meals and lodging are not covered, even if you're staying in a hospital — the hospital bill itself is covered, but not the cost of eating while you're there.

Marijuana, even in states where it's legal, is not covered by HSA rules because it remains illegal under federal law. Cosmetic dental work like veneers or teeth whitening is not covered unless it's part of reconstructive surgery for an injury or disease.

How to know if something specific is covered

The IRS maintains a searchable database called Publication 502, which lists thousands of may have access to medical expenses. You can search it by keyword — for example, searching "acupuncture" will tell you that acupuncture is covered if it's performed by a licensed practitioner to treat a specific condition. Searching "massage" will tell you that therapeutic massage is covered if prescribed by a doctor for a medical condition, but a massage for relaxation is not.

Your HSA provider (the bank or financial company that holds your account) can also answer questions about whether a specific expense qualifies. Many providers have a customer service line you can call, and some have online chat. It's worth asking before you spend the money, because if you guess wrong, you'll owe taxes and a penalty.

When you're unsure, a good rule of thumb is: if it's something you'd buy even if you didn't have a health condition, it's probably not covered. If it's something you're buying specifically to treat or manage a medical condition, it might be.

What happens if you spend HSA money on something that's not covered

You can withdraw money from your HSA for any reason. But if you use it for a non-may have access to expense, you have to report that withdrawal on your tax return. You'll pay income tax on the amount (at your regular tax rate) plus a 20% penalty. So if you withdraw $100 for something that's not covered and you're in the 22% tax bracket, you'll owe $22 in income tax plus $20 in penalty — $42 total on a $100 withdrawal.

The exception is after age 65. Once you turn 65, you can withdraw HSA money for any reason without the 20% penalty. You'll still owe income tax on non-medical withdrawals, but not the penalty. This is one reason HSAs are sometimes called "retirement accounts in disguise" — after 65, they work like a traditional IRA.

Keeping records and receipts

The IRS doesn't require you to submit receipts when you withdraw HSA money, but you do need to keep them. If the IRS audits you, you'll need to show that the money you withdrew was actually spent on may have access to expenses. Keep receipts, invoices, and any prescriptions or doctor's notes for at least three years after you file your tax return for the year you made the withdrawal.

Some HSA providers offer a debit card that you can use to pay for medical expenses directly. When you use the card at a pharmacy or doctor's office, the transaction is usually recorded as a medical expense automatically. But you should still keep your receipts, because the card company's record alone isn't proof that the expense was may have access to.

Frequently Asked Questions

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

Yes. You can use your HSA to pay for medical expenses of your spouse and any dependent you claim on your tax return, even if they're not covered by your health insurance plan. You don't need to be on the same insurance plan.

What if I buy something over-the-counter and then get a prescription for it later?

You can't go back and reimburse yourself from your HSA for something you already paid for out of pocket. The prescription or doctor's note has to be in place before you buy it. Plan ahead if you know you'll need an over-the-counter medication regularly.

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

No. Veterinary expenses are not covered by HSA rules, even if the pet is a service animal. Service animal training and equipment may be covered in some cases, but the veterinary care itself is not.

Do I have to use my HSA money by the end of the year?

No. Unlike a flexible spending account (FSA), HSA money rolls over year to year. You can let it sit in the account and use it whenever you need it, even decades later. This is one major advantage of an HSA over an FSA.

Can I invest my HSA money, or does it have to sit in a savings account?

Many HSA providers let you invest the money in mutual funds or other investments, similar to a retirement account. The investment earnings are tax-free as long as you eventually use the money for may have access to medical expenses. Check with your specific HSA provider about what investment options they offer.