HSA money covers medical expenses, but not the ones you might think

You can use HSA funds to pay for doctor visits, prescriptions, dental work, vision care, and medical equipment without owing taxes on the withdrawal. You cannot use HSA money for gym memberships, cosmetic procedures, or over-the-counter medications unless a doctor prescribes them. The IRS publishes a specific list of what counts as a medical expense, and the rules are stricter than most people assume. If you spend HSA money on something not on that list, you owe income tax on the withdrawal plus a 20 percent penalty — unless you are over 65, in which case you owe only the income tax.

The line between allowed and forbidden is often unclear because the IRS groups expenses into categories rather than listing every single item. A prescription decongestant is allowed; the same decongestant sold over the counter is not. A doctor-prescribed weight loss program is allowed; a gym membership is not. Understanding the actual rules saves you from accidentally triggering a tax bill on money you thought was yours to spend.

Key Takeaways

  • HSA money covers doctor visits, hospital stays, prescription drugs, dental care, vision care, and medical equipment like wheelchairs or hearing aids without tax penalty.
  • Over-the-counter medications and supplements are not covered unless a doctor writes a prescription for them, even if they treat a real medical condition.
  • Cosmetic procedures, gym memberships, and general wellness expenses are never covered, even if they improve your health.
  • Withdrawals for non-medical expenses trigger income tax plus a 20 percent penalty if you are under 65; after 65, you owe only income tax.
  • The IRS maintains a searchable database of approved medical expenses, and you can ask your HSA administrator whether a specific expense qualifies before you spend.

Doctor visits, hospital care, and surgery

Any expense related to diagnosis, treatment, or prevention of disease is covered. This includes office visits to your primary care doctor, specialist appointments, hospital stays, emergency room visits, surgery, anesthesia, and lab work. You can use HSA money to pay your deductible, copay, or coinsurance for these services. You can also use it to pay the full cost of care if you are seeing an out-of-network provider or paying out of pocket.

Preventive care visits — annual physicals, cancer screenings, blood pressure checks — are covered. Mental health treatment, including therapy and psychiatric medication, is covered. Substance abuse treatment is covered. Physical therapy and rehabilitation after an injury or surgery are covered. If a doctor orders it as part of treatment, HSA money can pay for it.

Prescription medications and some over-the-counter drugs

Any medication a doctor prescribes is covered, whether it is for a chronic condition like diabetes or a short-term infection. This includes birth control pills, antidepressants, blood pressure medication, and insulin. You can use HSA money to pay the pharmacy directly or to reimburse yourself after you pay out of pocket.

Over-the-counter medications are covered only if a doctor writes a prescription for them. Aspirin, ibuprofen, antihistamines, and decongestants sold without a prescription are not covered — even if you buy them to treat a real medical problem. If your doctor writes a prescription for ibuprofen or any OTC drug, then HSA money can pay for it. Vitamins and supplements are not covered unless a doctor prescribes them to treat a specific deficiency or disease.

Dental and vision care

Dental expenses covered by HSA money include cleanings, fillings, root canals, extractions, crowns, bridges, and orthodontia like braces. You can use HSA funds to pay your dental insurance premiums if your plan is separate from your medical insurance. Cosmetic dental work — teeth whitening, veneers purely for appearance — is not covered.

Vision expenses include eye exams, glasses, contact lenses, and contact lens solution. Laser eye surgery (LASIK or PRK) is covered. Sunglasses are not covered, even if they have a prescription. If you need glasses or contacts to correct a vision problem, HSA money covers the full cost.

Medical equipment and supplies

HSA money covers the cost of medical equipment your doctor says you need: wheelchairs, crutches, canes, walkers, hearing aids, glucose monitors, blood pressure cuffs, and oxygen equipment. It covers supplies like bandages, syringes, test strips for diabetes, and incontinence products. It covers the cost of a mattress if your doctor prescribes it to treat a medical condition like severe back pain.

The equipment must be primarily medical in nature — it cannot be something that would be useful even if you were healthy. A shower chair for someone with arthritis is covered; a regular chair is not. A bed rail for someone recovering from surgery is covered; a regular bed frame is not. If you are unsure, ask your HSA administrator or check the IRS list before you buy.

Insurance premiums and long-term care

HSA money can pay premiums for long-term care insurance, which covers nursing home care, assisted living, or in-home care if you become unable to care for yourself. There are limits: you cannot spend more than a certain amount per year on long-term care insurance premiums, and the limit depends on your age. In 2024, the limit ranges from $450 per year for someone under 40 to $3,000 per year for someone over 60, but these amounts change annually.

HSA money cannot pay premiums for your regular health insurance, life insurance, disability insurance, or car insurance. It cannot pay for Medicare premiums if you are under 65, though it can pay Medicare premiums once you turn 65. It cannot pay for coverage under your spouse's employer plan.

Expenses that look medical but are not covered

Gym memberships and fitness classes are not covered, even if your doctor recommends exercise. Weight loss programs are not covered unless a doctor prescribes the specific program to treat obesity as a disease. Cosmetic surgery — facelifts, liposuction, breast augmentation — is not covered. Hair loss treatments are not covered unless they treat a medical condition like alopecia areata.

Maternity clothes, baby formula, and diapers are not covered. Childcare is not covered. Meals and lodging during a hospital stay are covered, but meals and lodging while traveling to a medical appointment are not. Marijuana is not covered, even in states where it is legal and even if a doctor recommends it, because it remains illegal under federal law and the IRS does not recognize it as a medical expense.

How to know if an expense qualifies

The IRS publishes Publication 502, which lists hundreds of medical expenses and whether they are covered. You can search it online or ask your HSA administrator — most have a customer service line and can tell you whether a specific expense qualifies before you spend the money. If you are unsure, you can also ask your doctor whether they will write a prescription for an over-the-counter medication, which automatically makes it HSA-may be able to access.

Keep receipts for everything you buy with HSA money. If the IRS audits you, you will need to show that the expense was medical in nature. If you cannot prove it, you owe income tax plus the 20 percent penalty on the full amount. The penalty applies to the withdrawal, not to the expense itself, so a $100 non-medical withdrawal costs you roughly $30 in penalties and taxes (depending on your tax bracket).

Frequently Asked Questions

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

Yes, as long as your spouse is your dependent for tax purposes. You can use HSA money to pay for their doctor visits, prescriptions, dental work, and other medical expenses. You do not have to be on the same health insurance plan.

What happens if I spend HSA money on something that is not covered?

You owe income tax on the withdrawal at your normal tax rate, plus a 20 percent penalty if you are under 65. If you withdraw $500 for a non-medical expense and your tax bracket is 22 percent, you owe roughly $110 in taxes and penalties. After age 65, you owe only the income tax, not the penalty.

Can I use HSA money to pay for therapy or counseling?

Yes. Mental health treatment, including therapy, counseling, and psychiatric medication, is covered. You can use HSA money to pay a therapist, psychologist, or psychiatrist, whether they are in-network or out-of-network.

Is acupuncture covered by HSA money?

Yes, if a doctor refers you for it or if it is part of a treatment plan for a medical condition. Acupuncture ordered by a physician to treat pain, nausea, or another medical problem is covered. Acupuncture for general wellness or stress relief without a medical diagnosis is not covered.

Can I use HSA money to pay for a doctor-prescribed diet program?

Yes, if a doctor prescribes it to treat obesity or another medical condition. A generic gym membership or commercial weight loss program is not covered. A program prescribed by your doctor as part of treatment for diabetes, heart disease, or obesity is covered.