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IRS-Qualified Medical Expenses

What does an HSA pay for?

The tax-free dollars you save in an HSA can only be used to pay for "IRS-qualified medical expenses." These include:

The Affordable Care Act
  • Medical expenses before and after you meet your health plan deductible
  • Dental care services
  • Vision care services
  • Prescription services
  • Over-the-counter medications prescribed by your doctor
  • Certain medical equipment

Insurance premiums are generally NOT considered IRS-qualified medical expenses unless they are for:

  • Continuing COBRA or ERISA coverage
  • Certain long-term care insurance
  • Health coverage during unemployment
  • Coverage over age 65, including Medicare or employer retirement health benefits

If you use your HSA to pay for non-IRS-qualified expenses before age 65, you will have to pay taxes on those funds as well as a 20% penalty. After age 65, you pay taxes but no penalty.

You can find a list of IRS-qualified medical expenses on the IRS website (www.irs.gov), or by viewing
IRS Publication 502 - Medical and Dental Expenses. If you have questions about the eligibility of a medical expense, please consult your tax advisor or the IRS.