HSA Ed on Accountholders off Employers off Agents Brokers off

Eligible Medical Expenses

An eligible medical expense is an expense that pays for healthcare services, equipment or medications as described in IRS Publication 502.

IMPORTANT: In 2011, your Health Savings Account (HSA) may no longer be used for over-the-counter drugs, unless they are prescribed by your doctor.

In general, your HSA can be used for:

  1. Expenses applied to your health plan deductible
  2. Dental care services
  3. Vision care services
  4. Prescription services
  5. Over-the-counter medications prescribed by your doctor 
  6. Certain medical equipment

 cost of healthcare

Keep In Mind

  • Funds used to pay for qualified medical expenses are always tax-free, regardless of age or HSA-compatible health plan coverage.
  • 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 After age 65, HSA funds may be withdrawn for non-eligible expenses with no penalty (regular income tax will apply).
  • HSA funds can be used to reimburse yourself for past medical expenses if the expense was incurred after your HSA was established.
  • If you have questions regarding the eligibility of medical expenses, always contact a qualified tax advisor or the IRS.
  • Due to healthcare reform, additional HSA changes are on the way. We will keep you notified! If you have questions, please contact us.

Important Links

Click here for a complete list of eligible medical expenses.

Click here for information about healthcare reform, which affects future eligible medical expenses.

Download a quick reference list of eligible medical expenses.

Insurance Exceptions

 

Insurance premiums are generally not considered eligible medical expenses. However, there are four exceptions:

  1. Premiums for continuation coverage under COBRA or ERISA for the accountholder, spouse or dependents;
  2. A qualified long-term care insurance contract;
  3. A health plan maintained while the accountholder, spouse or dependent is receiving unemployment compensations under any Federal or State Law;
  4. Premiums for those over the age of 65, including Medicare or retirement health benefits provided by a former employer.