Medical expenses you can pay from your HSA without penalty
You can withdraw money from your HSA to pay for may have access to medical expenses — and the IRS has a long list. The key rule: the expense must be for diagnosis, treatment, or prevention of a disease or condition. If you use HSA money for something that doesn't meet that definition, you pay income tax on the withdrawal plus a 20% penalty.
The most common may have access to expenses are copays, coinsurance, and deductibles on your health insurance. You can also pay for prescription medications, insulin, and over-the-counter drugs (but only if you have a prescription from a doctor). Dental work — fillings, crowns, root canals, orthodontia — counts. So do vision expenses: glasses, contacts, eye exams, and LASIK surgery.
Less obvious but still covered: hearing aids and batteries, crutches, wheelchairs, blood pressure monitors, glucose meters, and pregnancy tests. Mental health treatment, physical therapy, chiropractic care, and acupuncture are covered if a doctor orders them. You can pay for medical equipment rentals, prosthetics, and even the cost of a guide dog if you're blind or deaf.
Key Takeaways
- Copays, deductibles, coinsurance, prescriptions, dental work, and vision care are all may have access to HSA expenses with no penalty.
- Over-the-counter medications and supplies (pain relievers, allergy medicine, bandages, thermometers) require a prescription to be HSA-may be able to access.
- Gym memberships, cosmetic procedures, and general wellness products are not may have access to expenses, even if they improve your health.
- You can use your HSA to pay a family member's medical expenses if they are your dependent for tax purposes.
- After age 65, you can withdraw money for any reason without the 20% penalty, though non-medical withdrawals are still taxed as income.
Over-the-counter items that need a prescription to may have access to
The rules changed in 2020. Before that, you could buy most over-the-counter medicines and supplies with HSA money. Now you need a prescription from a doctor, even for common items like ibuprofen, cold medicine, allergy pills, or antacids.
The prescription doesn't have to be filled at a pharmacy — a doctor's written order or electronic prescription counts. Some people get a standing prescription from their doctor for items they use regularly, which makes the process simpler. Without the prescription, the purchase is not a may have access to expense and triggers the tax and penalty.
Supplies like bandages, gauze, thermometers, and blood pressure cuffs do not need a prescription. The rule applies to medications and drugs specifically.
What you cannot pay for with HSA money
Cosmetic procedures — including Botox, teeth whitening, hair removal, and plastic surgery — are not covered unless they treat a specific medical condition. For example, rhinoplasty to fix a deviated septum that blocks breathing is covered; rhinoplasty for appearance alone is not.
Gym memberships, fitness classes, and general wellness products are not may have access to expenses, even if your doctor recommends exercise. Vitamins and supplements are not covered unless prescribed by a doctor for a diagnosed deficiency. Sunscreen, toothpaste, and other hygiene products do not may have access to.
Cosmetic dentistry — whitening, veneers, bonding for appearance — is not covered. Orthodontia for adults is covered only in some plans; check your HSA plan documents. Weight loss programs and diet plans are not covered unless they are part of treatment for a specific disease like diabetes or obesity-related hypertension.
How to know if something is a may have access to expense
The IRS publishes a list of may have access to medical expenses in Publication 502, which is available on the IRS website. Your HSA provider — the bank or financial company that holds your account — also publishes a list of covered items, and it may be more restrictive than the IRS list because your employer's plan can set its own rules.
When in doubt, ask your HSA provider before you spend the money. Most providers have a customer service line and can tell you in a few minutes whether a specific item qualifies. Keeping receipts and documentation is important: if the IRS audits your HSA, you need to show that the money went to may have access to expenses.
Some HSA providers offer a debit card that flags non-may have access to purchases at the point of sale. Others require you to submit receipts and reimburse yourself from the account. Know which system your provider uses, because the process for getting your money back differs.
Using your HSA for family members' medical expenses
You can pay for medical expenses of your spouse and any dependent children, even if they are not covered by your health insurance plan. The person does not have to be on your HSA; you just need to be responsible for their medical costs.
You cannot use your HSA to pay for an adult child's medical expenses unless that child is still your dependent for tax purposes. Once they file their own tax return and claim themselves, you cannot use your HSA for their care.
Keep records showing the relationship and the date of the expense. If you reimburse a family member directly and then withdraw the money from your HSA, document both transactions.
What happens after age 65
At age 65, the rules change. You can still withdraw money for may have access to medical expenses without penalty. But you can also withdraw money for any reason — groceries, rent, travel — without the 20% penalty. You will owe income tax on non-medical withdrawals, just as you would with a traditional IRA.
This makes an HSA a useful retirement savings tool if you do not spend all the money on medical expenses while you are working. The account grows tax-free, and after 65 you have the flexibility to use it however you need.
Medicare premiums (Part B, Part D, and supplemental insurance) are considered may have access to medical expenses at any age, so you can pay those from your HSA without penalty. Long-term care insurance premiums also may have access to, up to certain limits set by the IRS each year.
Keeping records and avoiding penalties
The IRS can audit your HSA at any time. If you cannot show that withdrawals went to may have access to expenses, you owe income tax plus the 20% penalty on those amounts, plus interest. The burden is on you to prove the expense was may have access to.
Save receipts, invoices, and explanation of benefits statements. If you withdraw cash and reimburse yourself, keep a record of the date, amount, and what it was for. Some people keep a simple spreadsheet; others use their HSA provider's online portal, which often tracks purchases automatically if you use the debit card.
If you make a withdrawal by mistake — for example, you thought something was covered and it was not — you can put the money back into the account within a certain timeframe to avoid the penalty. Ask your HSA provider about their process for correcting errors.
Frequently Asked Questions
Can I use my HSA to pay for my spouse's medical expenses if they are not on my health insurance?
Yes. As long as your spouse is your dependent for tax purposes, you can use your HSA to pay for their medical expenses regardless of what insurance they have or whether they have insurance at all. Keep documentation showing the relationship and the date of the expense.
Do I need to use my HSA money by the end of the year or do I lose it?
No. Unlike a flexible spending account (FSA), an HSA does not have a "use it or lose it" rule. Money you do not spend rolls over to the next year and grows tax-free indefinitely. You can let it accumulate for retirement.
Can I use my HSA to pay for therapy or mental health counseling?
Yes, if a doctor orders it or refers you to a mental health professional. Therapy, psychiatry, and counseling are may have access to medical expenses. If you pay out of pocket and want to reimburse yourself from your HSA later, keep the receipt and documentation from the provider.
What if I buy something I think is covered and later find out it is not?
Contact your HSA provider immediately. If you withdrew the money recently, you may be able to return it to the account and avoid the penalty. If the withdrawal was months ago, you will owe income tax and the 20% penalty on that amount when you file your tax return, unless you can show it was actually a may have access to expense.
Can I use my HSA to pay for my pet's medical expenses?
No. Veterinary expenses are not may have access to medical expenses under IRS rules, even if the pet is a service animal. The exception is a guide dog for someone who is blind or deaf — that counts as a medical device, and the cost of the dog and its training is covered.