You can use HSA funds for medical, dental, and vision expenses that your insurance doesn't cover—but the IRS has a specific list, and using the money for anything else triggers taxes and penalties.

A Health Savings Account lets you set aside pre-tax money for healthcare costs. The catch is that the IRS decides what counts as a healthcare expense. Spend it on something that doesn't make the list, and you'll owe income tax on that amount plus a 20% penalty. Spend it on something that does, and the withdrawal is tax-free.

The list is longer than most people think. It includes obvious things like doctor visits and prescriptions, but also hearing aids, dental work, glasses, therapy, and even some over-the-counter items if a doctor prescribes them. It does not include gym memberships, vitamins you buy without a prescription, or cosmetic procedures.

Key Takeaways

  • HSA funds cover doctor visits, hospital stays, prescription drugs, dental work, vision care, and mental health treatment without tax penalty.
  • Over-the-counter medications and medical supplies count only if a doctor writes a prescription for them, not if you buy them on your own.
  • Expenses your insurance already covers are not may be able to access—the HSA is for costs you pay out of your own pocket.
  • Withdrawals for non-medical expenses are taxed as income plus hit with a 20% penalty, so keep receipts to prove what you spent on.

Medical, Dental, and Vision Expenses That may have access to

Doctor visits, hospital stays, surgery, and urgent care all may have access to. So do prescription medications, insulin, and medical devices your doctor prescribes—including hearing aids, wheelchairs, crutches, and oxygen equipment. If a licensed healthcare provider says you need it for a medical condition, the IRS usually allows it.

Dental work counts: fillings, root canals, crowns, braces, and extractions. Vision expenses include eye exams, glasses, contact lenses, and laser eye surgery. Mental health treatment—therapy, psychiatry, and counseling—qualifies if provided by a licensed professional. Fertility treatments, including IVF and related procedures, are covered. Chiropractic care, acupuncture, and physical therapy count if a doctor refers you or if your state licenses the provider.

Nursing home care and long-term care facilities may have access to if they provide medical care, not just room and board. If you're unsure whether a specific treatment qualifies, the IRS publishes a detailed list on its website, and your HSA provider can usually answer yes-or-no questions about specific expenses.

Over-the-Counter Items: When They Count and When They Don't

This is where most people get confused. Over-the-counter pain relievers, cold medicine, allergy medication, and antacids do not may have access to unless a doctor writes a prescription for them. If you buy ibuprofen off the shelf at a drugstore, you cannot use HSA funds. If your doctor writes a prescription for the same ibuprofen, you can.

Medical supplies are different. Bandages, gauze, thermometers, blood pressure monitors, and glucose test strips may have access to without a prescription. The rule is: if it's a supply you use to treat or monitor a condition, it counts. If it's a medication you take, it needs a prescription.

Vitamins and supplements do not may have access to, even if you take them for a specific health reason. Sunscreen does not may have access to. Toothpaste and mouthwash do not may have access to. These are considered general wellness items, not treatment for a diagnosed condition.

What Does Not may have access to, Even If It Feels Medical

Gym memberships and fitness equipment do not may have access to, even if your doctor recommends exercise. Weight loss programs do not may have access to unless they treat a specific disease like obesity diagnosed by a doctor—and even then, only the medical portion of the program, not the general fitness component. Cosmetic procedures like teeth whitening, Botox, or hair removal do not may have access to unless they're reconstructive after an injury or illness.

Maternity clothes, baby formula, and diapers do not may have access to. Childcare does not may have access to. Travel to a medical appointment does not may have access to, though the treatment itself does. Cosmetic dentistry—veneers, bonding for appearance only—does not may have access to, but cosmetic dentistry that restores function after an accident does.

Health insurance premiums themselves do not may have access to, with three exceptions: COBRA premiums while you're unemployed, long-term care insurance premiums, and health insurance premiums you pay while receiving unemployment benefits. Regular monthly premiums for your current health plan do not may have access to.

How to Prove You Spent the Money Correctly

Keep receipts and explanation of benefits (EOB) statements for every HSA withdrawal. The IRS does not require you to submit receipts when you withdraw the money, but if you're ever audited, you need to show that the expense was medical and that you paid for it yourself. A receipt showing the date, amount, provider name, and what was purchased is your proof.

If you withdraw money and later cannot document what it was for, the IRS treats it as a non-medical withdrawal. You'll owe income tax on the amount plus the 20% penalty. This applies even if the money actually was spent on something that qualifies—if you can't prove it, it doesn't count.

Keep records for at least three years after you file your tax return for the year you made the withdrawal. Your HSA provider keeps a record of when you withdrew the money; you keep the receipt showing what you spent it on. If the two don't match up in timing or amount, document why—for example, if you withdrew $500 in January but didn't spend it until March, note that.

Using HSA Funds for Family Members

You can use your HSA to pay for medical expenses of your spouse and dependents, even if they're not on your health insurance plan. Your spouse's dental work, your child's glasses, your parent's prescription—all may have access to if you claim them as dependents on your tax return. You do not need to be on the same insurance plan.

Once your child turns 26 or no longer qualifies as a dependent, you can no longer use your HSA for their expenses. If you're divorced, you can use HSA funds for your ex-spouse's medical expenses only if you were still married when the expense occurred. For dependents, the rule is straightforward: if you can claim them on your taxes, you can use HSA funds for their medical costs.

What Happens If You Spend HSA Money on Non-Medical Expenses

If you withdraw HSA funds and spend them on something that doesn't may have access to—say, a vacation or a new laptop—you owe income tax on that amount at your regular tax rate, plus a 20% penalty. If you withdrew $1,000 for a non-medical expense and your tax bracket is 22%, you'd owe $220 in taxes plus $200 in penalty, for a total of $420.

The penalty applies only to the non-medical portion. If you withdrew $1,000 and $800 was medical and $200 was not, you pay tax and penalty only on the $200. You report this on your tax return using Form 8889.

After age 65, the penalty goes away—you still owe income tax on non-medical withdrawals, but not the 20% penalty. This is why some people use HSAs as a retirement savings account: after 65, you can withdraw for any reason and only pay income tax, like a traditional IRA.

Frequently Asked Questions

Can I use HSA money to pay my health insurance deductible?

Yes. Your deductible is a medical expense you pay out of pocket. Once you meet it, your insurance starts covering costs. Using HSA funds to pay toward your deductible is a direct medical expense and qualifies for tax-free withdrawal.

What if my doctor prescribes something but my insurance covers it?

If your insurance pays for it, you cannot use HSA funds for that same expense. The HSA is for costs you pay yourself. If your insurance covers 80% and you pay 20%, you can use HSA funds only for your 20% share.

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

No. Veterinary expenses do not may have access to, even if your pet is a service animal. The IRS limits HSA use to medical care for you, your spouse, and your dependents—all human dependents.

Do I have to spend my HSA money in the same year I contribute it?

No. HSA funds roll over year to year with no limit. You can contribute in 2024 and spend the money in 2030. This is different from a Flexible Spending Account (FSA), which has a use-it-or-lose-it rule.

What if I'm not sure whether an expense qualifies?

Ask your HSA provider before you withdraw. They can tell you whether a specific expense or provider qualifies. You can also check the IRS Publication 969, which lists hundreds of may have access to and non-may have access to expenses. When in doubt, keep the receipt—if it turns out the expense doesn't may have access to, you'll need proof of what you spent.