What is covered by an HSA?

The IRS outlines which medical, vision, dental and prescriptions qualify within an HSA. While many common expenses like office visits, prescriptions, labs and x-rays are covered, we’re sorry to say a few, like dancing lessons and cosmetic surgery, are not. For specifics, you can review the IRS publication 502 and IRS Publication 969.

Examples of qualified medical expenses

Acupuncture
Alcoholism treatment
Ambulance services
Artificial limb or prosthesis
Artificial teeth
Birth control pills
Braille books/magazines (portion of costs)
Car adaptations (for persons with disabilities)
Chiropractors
Christian science practitioners
Contact lenses (including saline solution and cleaner)
Crutches
Dental treatment (x-rays, fillings, extractions, dentures, braces, etc.)
Diagnostic devices (such as a blood sugar test kit)
Doctor’s fees
Drug addiction treatment
Eyeglasses (including eye examinations)
Eye surgery (including laser eye surgery)
Fertility enhancement (including in-vitro fertilization)

Guide dog (for visually-impaired or hearing-impaired)
Hearing aids and hearing aid batteries
Hospital services (including meals and lodging)
Insulin
Laboratory fees
Lactation assistance supplies
Prescription medicines or drugs
Nursing home
Nursing services
Operations or surgery
Psychiatric care
Psychologist
Telephone equipment for hearing-impaired
Telephone equipment for visually-impaired
Therapy or counseling
Transplants
Transportation for medical care
Vasectomy
Wheelchair
X-rays

IMPORTANT: As of 2011, your HSA may no longer be used for over-the-counter drugs, unless they are prescribed by your doctor.

Insurance premiums are generally not considered qualified medical expenses. However, the following types of insurance premiums generally qualify:

Continuation coverage under federal law (i.e., COBRA)
Qualified long-term care insurance premiums
Any health plan maintained while an individual is receiving unemployment compensation under federal or state law
For accountholders age 65 and over (i.e., those eligible for Medicare), premiums for any health insurance (including Medicare Parts B & D premiums)

Prior to age 65, funds used to pay for non-eligible medical expenses are subject to normal income tax and a 20% penalty. After age 65, funds may be withdrawn for non-eligible expenses with no penalty (regular income tax will apply). Medicare supplemental (Medigap) policy premiums are not included.