HSA Eligible Expenses

A health savings account or HSA offers a tax-advantaged way to save for healthcare expenses. You might have an HSA if you’re enrolled in a high deductible health plan (HDHP). These accounts can’t be used to pay for every expense, however. The IRS maintains a list of HSA eligible expenses that you can use as a guide when planning your healthcare savings strategy. For help planning how to use your HSA or any other financial questions, consider working with a financial advisor.

What Is a Health Savings Account?

A health savings account is a tax-advantaged plan that’s designed for healthcare and medical expenses. These accounts are associated with high deductible health plans, which can be offered through employers. You may also choose to purchase a high deductible health plan if you’re self-employed.

When you open an HSA, you’ll receive a debit card that’s linked to your account. You can use this card to pay for healthcare expenses. HSAs have annual contribution limits. The amount you can contribute is determined by whether you have individual or family coverage. For 2024, the HSA contribution limits are as follows:

$4,150 for individual coverage ($3,850 in 2023)
$8,300 for family coverage ($7,750 in 2023)

The IRS adjusts HSA contribution limits regularly to account for inflation. If you have an HSA at work, both you and your employer can make contributions up to the annual limit. The money in your HSA can earn interest, depending on how you choose to invest. Mutual funds and exchange-traded funds (ETFs) are two investment options you might have.

So why would someone save in an HSA? The simple answer is tax benefits. A health savings account offers triple the tax benefits, in that:

Contributions are tax-deductible
Savings grows tax-deferred
Withdrawals for HSA-eligible expenses are tax-free

The money you save in an HSA each year rolls over until you need it. That means unlike a Flexible Spending Account (FSA), an HSA is not use it or lose it.

If you take money out of an HSA before age 65 for any reason other than healthcare, a 20% tax penalty applies. You’ll also owe income tax on the distribution. Once you reach age 65, you can withdraw money from a health savings account for any reason, regardless of whether you use the funds for healthcare. You’ll just have to pay ordinary income tax on those distributions.

What Are HSA Eligible Expenses?

HSA-eligible expenses are ones the IRS has deemed as qualified. That means you can use money in your HSA to pay for those expenses without it being considered a taxable distribution. Expenses related to medical care, dental care and vision care fall under this umbrella.

Many of the expenses that are considered HSA-eligible are ones that your insurance might not cover. The money in your HSA can be used to pay for expenses for yourself if you have individual coverage or your spouse and any dependents you have if you’re enrolled in a family plan.

Is every expense HSA eligible? The answer is no, there are some things you can’t pay for using money in a health savings account. Overall, however, the list of HSA-eligible expenses is fairly extensive.

HSA Eligible Expenses

It’s important to check with your healthcare plan administrator to find out exactly what’s covered if you have an HSA. That can help you avoid unexpected medical bills later. Here are 45 of the most commonly covered expenses under the Internal Revenue Code:

Abortion
Acupuncture
Ambulance fees
Artificial limbs and teeth
Bandages
Birth control pills
Body scans
Breast pumps and supplies
Breast reconstruction surgery
Chiropractor treatments
Contact lenses
Copays and coinsurance
Crutches
Dental treatment
Diagnostic services
Drug addiction
Drugs and medicines
Eye exams
Eyeglasses
Eye surgery
Fertility enhancement
Guide dogs and other service animals
Hearing aids
Home care
Lab fees
Lactation expenses
Long-term care
Long-term care insurance premiums
Nursing care
Optometry services
Oxygen
Physical exams
Pregnancy tests
Prosthetics
Psychiatric care
Special education
Sterilization
Surgery
Transplants
Vasectomy
Vision correction
Weight loss surgery
Wheelchairs
Wigs
X-rays

It’s important to note that expenses you incur before you enroll in an HSA are not eligible. Depending on the laws in your state, your expenses may not become eligible until after you’ve made your first contribution to a health savings account.

CARES Act HSA Eligible Expenses

The Coronavirus Aid, Relief and Economic Security (CARES) Act of 2020 expanded the list of includible expenses for HSAs. Under CARES Act rules, you can also use your HSA to pay for the following:

Acne treatment
Allergy medications
Aspirin
Band-aids
Breathing strips
Cold and cough medicine
COVID-19 tests
Eye drops
Heartburn medicine
Ibuprofen
Liners
Menstrual cups and pads
Nasal spray
Period panties
Sleep aids
Tampons
Thermometers

The CARES Act also added items designed to reduce the spread of COVID, including hand sanitizer, hand wipes and masks.

What Expenses Are Not HSA Eligible?

The IRS does specify certain health-related costs that aren’t considered to be qualified medical expenses. Some of the things you can’t use your HSA money to pay for without a tax penalty include:

Babysitting, childcare and nursing services for a healthy child
Controlled substances
Cosmetic surgery
Diaper services
Electrolysis
Funeral expenses
Hair transplants
Illegal treatments or surgeries
Maternity clothes
Swimming lessons
Teeth whitening
Veterinary expenses

These same expenses are ones that you can’t use to claim a deduction for qualified medical expenses.

Do You Need a Doctor’s Note for HSA Eligible Expenses?

You may need an official diagnosis from a physician to use your HSA to cover certain healthcare expenses without a tax penalty. If you’re unsure what the requirements are, it’s a good idea to check with your insurer first to see what’s covered and when a doctor’s note may be necessary.

Some of the HSA-eligible expenses that may require a diagnosis include:

Breast implant removal procedures
Cosmetic procedures scheduled to meet a specific healthcare need
Electric toothbrushes
Home and vehicle modifications that may be necessary to accommodate a person with disabilities
Massage therapy
Mattresses and special bedding
Meals and lodging associated with medical treatments
Vitamins and supplements
Weight loss programs

Documenting all of your medical expenses is always a good idea if you’re worried about the IRS raising questions later about how you’ve spent HSA funds. For example, if you travel for medical care you may want to keep a travel log showing your expenses for meals and lodging. You can also hold on to copies of receipts for any expenses you pay.

Bottom Line

A health savings account can help you save for healthcare costs while enjoying some tax breaks. Understanding what counts as HSA-eligible expenses – and what doesn’t – can help you avoid any unwelcome tax consequences when paying for medical care.

Retirement Planning Tips

Consider talking to your financial advisor about how to manage your HSA and make the most of the money you’re setting aside. Finding a financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with up to three vetted financial advisors who serve your area, and you can have a free introductory call with your advisor matches to decide which one you feel is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.
While an HSA isn’t specifically designed to be used as a retirement savings tool, you could use one of these accounts to supplement your retirement income. Remember, the money in your HSA carries over year to year. If you stay healthy in retirement, you could withdraw money from your HSA to pay for day-to-day living expenses or other costs. Just keep in mind that you’ll pay income tax on those distributions.