Eligible HSA Expenses

 

HSA money is for your out of pocket expenses not covered by insurance!

 

Before you spend any of your HSA money with a debit card or checkbook, make sure that you have verified that the expense is included on the IRS approved list of tax-free medical, dental, and vision expenses found in IRS publication 969 and  IRS Publication 502

At the bottom of this page is an example short list of items that you can spend your Health Savings Account money on tax free. And more importantly, a list of expenses that are NOT eligible. If borderline, please consult a tax adviser as the penalty is 20% plus income tax.

A qualified medical expense is defined as “the cost of diagnosis, cure, mitigation, and the costs for treatments for any part or function of the body.”

TIP: If you don’t have your HSA debit card or checkbook with you at time of purchase, keep the receipt, and reimburse yourself from the HSA tax free at a later date.

TIP: Many larger expenses like braces, dental implants, lasik eye surgery, and long term care insurance premiums (up to age based amounts); are allowed for tax free HSA distribution and are typically not covered in your health or dental plans.
1099 Tax FormIf you take a distribution from your HSA, you will receive a 1099 tax form. It will not be taxable or penalized with proof of receipts.
8889 Tax Form – Filed with your 1040 tax form to show contributions made to your HSA to get the tax deduction. The form is also used to declare distributions as a qualified expense and therefore not taxed or penalized. It’s based on the honor system, be sure to keep those receipts for 5-7 years.

5498 Tax Form – Received in May of each year directly from your custodian. It shows the ending balance in your HSA as of year end.

WARNING: Due to the new health reform law, starting in 2011, “over the counter” (OTC) medications are NOT an HSA or FSA eligible expense unless it is prescribed by a licensed physician.

WARNING: No double dipping! You cannot take tax free money from your HSA as a medical expense AND then also tax deduct the same expense on your Schedule A when you itemize. Also, you cannot take a tax free distribution if the medical expense was paid for, or reimbursed by, a different source (like a supplemental accident policy)

 

 


 

Expenses eligible for tax free disbursement:


  • Acupuncture
  • Alcoholism
  • Ambulance
  • Anesthetists
  • Artificial limbs
  • Birth control pills
  • Blood tests
  • Braces
  • Cardiographs
  • Chiropractor
  • Christian Science Practitioner
  • Contact lenses
  • Contraceptive devices
  • Convalescent home
  • Crutches
  • Dental treatment
  • Dental x-rays
  • Dentures
  • Dermatologist
  • Diagnostic fees
  • Diathermy
  • Drug addiction therapy
  • Drugs
  • Eyeglasses
  • Fees paid to health institute prescribed by a doctor
  • FICA and FUTA tax paid for medical care service
  • Fluoridation unit
  • Guide dog
  • Gynecologist
  • Healing services
  • Hearing aid and batteries
  • Hospital bills
  • Hydrotherapy
  • Insulin treatments
  • Lab tests
  • Lead paint removal
  • Legal fees (to authorize treatment for a mental illness)
  • Lodging (away from home for outpatient care)
  • Metabolism tests
  • Neurologist
  • Nursing (including board and meals)
  • Obstetrician
  • Operating room costs
  • Ophthalmologist
  • Optician
  • Oral surgery
  • Organ transplant (including donor’s expenses)
  • Orthopedic shoes
  • Orthopedist
  • Osteopath
  • Oxygen and oxygen equipment
  • Pediatrician
  • Physician
  • Physiotherapist
  • Postnatal treatments
  • Practical nurse for medical services
  • Premiums for long-term care insurance
  • Premiums for continuation coverage required by Federal law (COBRA) premiums for insurance received while receiving unemployment compensation
  • Prenatal care
  • Prescription medicines
  • Psychoanalyst
  • Psychologist
  • Psychotherapy
  • Radium therapy
  • Registered nurse
  • Special school costs for the handicapped
  • Spinal fluid test
  • Splints
  • Sterilization
  • Surgeon
  • Telephone or TV equipment to assist the hearing impaired
  • Therapy equipment
  • Transportation expenses (relative to health care)
  • Ultra-violet ray treatment
  • Vaccines
  • Vasectomy
  • Vitamins (if prescribed)
  • Wheelchair
  • X-rays

 


 

Expenses NOT eligible for tax free disbursement:

  • Advance payment for services to be rendered next year
  • Athletic club membership
  • Automobile insurance premium
  • Allocable to medical coverage
  • Boarding school fees
  • Bottled water
  • Commuting expenses of a disabled person
  • Cosmetic surgery and procedures
  • Cosmetics, hygiene products and similar items
  • Diaper service
  • Domestic help
  • Funeral, cremation or burial expenses
  • Health programs offered by resort
  • Hotels, health clubs and gyms
  • Illegal operations and treatments
  • Illegally procured drugs Maternity clothes
  • Nonprescription medication
  • OTC medications not prescribed by a doctor
  • Premiums for life insurance, income
  • Protection, disability, loss of limbs, sight or similar benefits
  • Scientology counseling
  • Social activities
  • Special foods or beverages
  • Specially designed car for handicapped other than autoette or special equipment
  • Stop smoking programs
  • Swimming pool
  • Travel for general health improvement
  • Tuition and travel expenses for sending a problem child to a particular school
  • Weight loss programs