What Expenses Are Covered by My Health Savings Account?

Money in an HSA covers many medical, dental, and even mental health services. The list can seem pretty straightforward, but there are definitely some items that may surprise you!
by Shannan Seely September 6, 2019

At Starship, we like to refer to health savings accounts (HSAs) as the crown jewel of tax-deferred investments. Why? Because no other type of account helps you save on medical expenses while also reducing your taxable income.

Your HSA acts as a personal savings account, but with more advantages. Contributions to a health savings account are not taxed, and the funds inside of them grow tax-free. Better yet? The money you withdraw from your HSA comes out tax-free when used to pay for eligible healthcare expenses.

Did You Know About These HSA-Eligible Medical Expenses?

A health savings account can even cover medical costs for your spouse and dependents, including your children up to age 26 (guess we should call them, ahem, young adults), even if family members are on a different health insurance plan. Were you aware of that? Honestly, we totally get it if you weren’t. But it’s some pretty great news, huh?

If you like to read the fine print, a list of what you are allowed and not allowed to spend is available in the Internal Revenue Service IRS Publication 502 (2018): Medical and Dental Expenses.

Eligible medical expenses that may surprise you include:

  • Acupuncture
  • Ambulance bills
  • Imaging tests such as magnetic resonance imaging (MRI) and X-rays
  • Medical equipment or supplies
  • Medical services such as home care
  • Payments to dentists and dental care (not covered by your insurance) such as artificial teeth
  • Payment to doctors 
  • Prescriptions
  • Qualified medical expenses you paid out of pocket and are not covered by your insurance
    • Breast pump, chiropractic services, condoms, hearing aids, physical therapy, psychological counseling, and smoking cessation programs
  • Subway, bus, or ride-share fare for medical treatment
  • Vision care that is not already covered by your medical insurance, including eyeglasses, laser eye surgery, contacts, and saline solution

What Medical Expenses Are Not HSA-Eligible?

Just because you think an expense helps you become or stay healthy doesn’t mean the IRS agrees.

Non-eligible medical expenses may include:

  • Child care for healthy babies
  • Elective cosmetic procedures
  • Funeral costs
  • Health club dues
  • Maternity clothes
  • Swimming lessons
  • Toothpaste and toiletries
  • Vitamins
  • Vacations

Another no-no? You can’t use HSA funds to pay for health insurance premiums unless you’re enrolled in Medicare (age 65 and older) and want to use it for a Medicare Advantage plan, are on COBRA continuation coverage, receive state or federal unemployment benefits, or have eligible long-term care insurance, according to the IRS.

What Happens If I Accidentally Use My HSA Card for Non-Medical Expenses?

Here’s the bad news: if you’ve already used your HSA to pay for something that’s not on the approved list, you most likely can’t reverse the  transaction nor escape a tax penalty. You will have to report the expense on your annual income tax return and pay taxes on it.

You’re probably not going to like this news either. People under 65 who spent money on unqualified medical expenses must pay a 20% penalty in addition to the income tax. Ouch! So remember to use HSA funds for qualified expenses only. Then you won’t have to go through the painful experience of losing some of your savings to taxes and penalties.

Check out the other advantages an HSA offers for your overall financial well-being here.


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