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 After age 65, funds may be withdrawn for non-eligible expenses with no penalty (regular income tax will apply).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.