Smart Quiz: Which of These is NOT an Eligible HSA Expense?
- Pregnancy Test Kits
- Service Animals
- Food Supplements
- Prescription Eyeglasses
A Health Savings Account (HSA), is a way for people to save pre-tax dollars to use for medical expenses. The account can be used for a variety of items, both prescription and over-the-counter (with limitations), but not for supplements. In fact, you may be surprised by what you can and can’t pay for with HSA dollars.
A Little Background on HSAs
An HSA is similar to a Flexible Spending Account (FSA) in terms of what it covers and the fact that money deposited into these accounts is not subject to income tax withholding, as long as they are used for qualifying medical expenses. FSAs are more common because they are offered as employee benefits. They must be obtained through an employer.
However, there are a few significant differences between the two. To qualify for an HSA, users need to have a High Deductible Health Plan (HDHP). Another major difference is that funds in the account do not “expire” the same way FSA monies do at the end of each year. HSAs stay with the account owners, even if they change jobs and can be started by individuals without employer involvement at all. These accounts also have different deposit limits each year.
There are other differences between HSAs and FSAs that have tax implications. Anyone interested in either type of account should check with a finance professional for advice on how they might affect their tax position.
Unusual Things That Qualify as HSA Medical Expenses
There are a few covered expenses HSA users might want to take advantage of that they might not think of right away. Fertility enhancements and pregnancy tests are covered for those thinking of starting a family. The HSA covers lactation expenses and breast pumps as well. The funds can also be used for birth control pills, sterilization, vasectomies and other family planning expenses. More covered items include:
- Over-the-counter meds with a prescription
- Braille books
- Smoking cessation and weight loss programs
- Drug and alcohol rehab
- Long-term care
Items That Don’t Qualify
Nutritional supplements are just some of the items users cannot purchase with HSA funds. Maternity clothes, babysitting and diaper services are not covered expenses for pregnant women or new mothers. Other items on the list of items that aren’t eligible include:
- Funeral expenses
- OTC meds without a prescription
- Cosmetic Surgery
- Hair Transplants
- Teeth whitening
There are conditions placed on some covered items, like a medical need for a wig as opposed to a cosmetic one. Medical need might play a role in excluded items as well. For example, reconstructive surgery after breast cancer might be covered even though the procedure is usually classified as cosmetic. Because things can change from year to year with programs like HSAs, it’s best to make sure an item qualifies before making a purchase.
~Here’s to Your Financial Health