A health savings account pays for medical costs, but only certain ones

A health savings account (HSA) is a bank account that holds money specifically for healthcare expenses. You put pre-tax dollars into it, the money grows without being taxed, and you withdraw it to pay for medical costs. The catch: you can only use it for certain healthcare expenses, or you'll owe taxes and a penalty on the withdrawal.

The IRS publishes a list of what counts as a may have access to medical expense. The list is longer than most people expect, but it has real limits. You can use HSA money for doctor visits, prescriptions, and dental work. You cannot use it for health insurance premiums (with one exception), gym memberships, or over-the-counter vitamins unless a doctor prescribes them.

The reason this matters: if you withdraw money for something that doesn't may have access to, you pay income tax on that amount plus a 20% penalty. That makes an unqualified $100 withdrawal cost you roughly $30 to $40 in taxes and penalties, depending on your tax bracket. Knowing the rules before you withdraw saves you money.

Key Takeaways

  • You can use HSA money for doctor visits, hospital stays, prescription medications, dental care, vision care, and mental health treatment.
  • Over-the-counter medicines and medical supplies (like bandages or blood pressure monitors) count only if you have a doctor's prescription or letter stating medical necessity.
  • You cannot use HSA money for health insurance premiums, except for COBRA continuation coverage, long-term care insurance, or health insurance while unemployed.
  • Withdrawing money for non-may have access to expenses triggers income tax plus a 20% penalty, so it's worth checking the IRS list before you take money out.
  • After age 65, you can withdraw HSA money for any reason without the 20% penalty, though non-medical withdrawals are still taxed as income.

Medical visits and treatments you can pay for

Doctor visits, specialist appointments, and hospital stays all count as may have access to expenses. This includes the visit itself, any tests or procedures done during the visit, and follow-up care. If your doctor orders lab work, imaging (like X-rays or MRI scans), or surgery, HSA money covers it.

Mental health and substance abuse treatment also count. This includes therapy sessions, psychiatric visits, and inpatient or outpatient rehab programs. You can use HSA funds to pay the therapist, the hospital, or the treatment center directly.

Dental and vision care are covered too. Cleanings, fillings, root canals, crowns, and orthodontia (braces) all may have access to. Eye exams, glasses, contact lenses, and laser eye surgery are all may be able to access. Hearing aids and hearing tests also count.

Prescription and over-the-counter medications

Prescription medications are always a may have access to expense. You can use your HSA debit card at the pharmacy, or pay out of pocket and reimburse yourself from the account later.

Over-the-counter medications are trickier. Aspirin, cold medicine, allergy medicine, and antacids do not count unless a doctor writes a prescription for them or provides a letter stating that the medication is medically necessary for a specific condition. A prescription for ibuprofen counts; buying ibuprofen on your own does not. This rule changed in 2020, so older information online may be outdated.

Medical supplies like bandages, blood pressure monitors, thermometers, and glucose meters follow the same rule: they count if a doctor prescribes or documents medical necessity, but not if you buy them on your own. If you have a chronic condition and your doctor says you need these supplies, ask for a letter stating that. Keep it with your HSA records in case you're audited.

What you cannot use HSA money for

Health insurance premiums are generally off-limits. You cannot use HSA funds to pay your monthly health insurance bill, your employer's health plan premium, or your spouse's insurance. The one exception: if you're on COBRA continuation coverage (the temporary health insurance you get after losing a job), you can use HSA money for those premiums. You can also use it for long-term care insurance premiums and for health insurance while you're unemployed and receiving unemployment benefits.

Gym memberships, fitness classes, and general wellness programs do not count, even if they're meant to improve your health. Vitamins and supplements do not count unless a doctor prescribes them for a specific medical condition. Cosmetic procedures like teeth whitening or Botox do not count unless they're medically necessary (for example, reconstructive surgery after an injury).

Childcare, maternity clothes, and general household items are not may have access to expenses. Neither are travel costs to get medical care, lodging near a hospital, or meals while receiving treatment — even though these are real costs of healthcare.

How to know if something qualifies before you spend

The IRS publishes Publication 502, which lists may have access to medical expenses in detail. It's long and technical, but it's the official source. You can search it by keyword (for example, "acupuncture" or "weight loss") to see whether a specific expense counts.

If you're unsure, ask your HSA provider. Most banks and financial companies that administer HSAs have customer service lines and online resources. They can tell you whether a specific expense qualifies. Some HSA providers also offer a text or app feature where you can photograph a receipt and get a quick answer.

When in doubt, keep the receipt and the doctor's documentation. If the IRS ever audits your HSA, you'll need proof that the expense was medical and that it was necessary. A receipt alone usually isn't enough; you need something showing why you incurred the cost.

Using HSA money after age 65

Once you turn 65, the rules change. You can still use HSA money for may have access to medical expenses without any penalty. But you can also withdraw money for any reason — groceries, rent, travel, anything — and you'll only owe income tax on it, not the 20% penalty.

This makes an HSA function like a retirement account after 65. Many people use this feature to cover healthcare costs in retirement, since Medicare doesn't cover everything. Others use it as a general savings account once they reach that age, since the penalty goes away.

Keeping records and avoiding mistakes

The IRS can audit your HSA at any time, even years after you make a withdrawal. Keep receipts, invoices, and any doctor's letters or prescriptions that document why you withdrew money. If you paid out of pocket and reimbursed yourself from the HSA, keep both the original receipt and proof that you reimbursed yourself.

Many people make the mistake of using their HSA debit card for something they think is medical, only to find out later it wasn't may have access to. If you're not certain, pay with a different card and ask first. You can always reimburse yourself from the HSA once you confirm it qualifies.

Another common mistake: forgetting that you can reimburse yourself years later. You don't have to use HSA money in the same year you incur the expense. If you paid for dental work in 2023 out of pocket, you can reimburse yourself from your 2024 or 2025 HSA. This flexibility lets you keep the money invested longer and withdraw it only when you need it.

Frequently Asked Questions

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

Yes, as long as your spouse is a dependent on your tax return. You can use your HSA to pay for their doctor visits, prescriptions, dental work, and other may have access to medical expenses. The money doesn't have to be in a separate account for them.

What happens if I accidentally use HSA money for something that doesn't count?

You'll owe income tax on that amount plus a 20% penalty. If you withdrew $500 for something that wasn't may have access to and you're in the 22% tax bracket, you'd owe roughly $110 in taxes and penalties. Some people can correct this by recontributing the money, but rules vary by HSA provider.

Does pet medical care count as a may have access to expense?

No. Veterinary care and pet health expenses do not count as may have access to medical expenses under IRS rules, even if the pet is a service animal. The exception is if the animal is a guide dog for someone who is blind; the cost of training and caring for the guide dog may count.

Can I use HSA money to pay for my child's braces?

Yes. Orthodontia, including braces, is a may have access to dental expense. You can use HSA money to pay the orthodontist directly or to reimburse yourself if you paid out of pocket.

Is there a important date for using HSA money, or does it roll over?

HSA money rolls over year to year with no important date. Unlike a flexible spending account (FSA), you don't lose unspent HSA money at the end of the year. This is one reason an HSA is valuable as a long-term savings tool.