One of the most common questions HSA holders ask is: "What can I actually spend this money on?" The answer is far broader than most people realize. The IRS defines qualified medical expenses under Section 213(d) of the Internal Revenue Code, and the list covers everything from major surgery to over-the-counter sunscreen. Understanding what qualifies is critical because qualified withdrawals are completely tax-free, while non-qualified withdrawals before age 65 trigger income tax plus a steep 20% penalty.
The Tax-Free Spending Power of Your HSA
Every dollar you spend from your HSA on a qualified medical expense avoids federal income tax, state income tax (in most states), and FICA taxes. For someone in the 22% federal bracket with a 5% state rate, a $1,000 medical bill paid through the HSA effectively costs only $654 after tax savings - this is the triple tax advantage in action. Use the calculator below to estimate your personal savings.
HSA Tax Savings Calculator
Estimates only. Actual savings depend on your tax situation. Consult a tax advisor.
The Core Categories
Doctor and Hospital Visits
All expenses for the diagnosis, cure, mitigation, treatment, or prevention of disease are qualified. This includes:
- Office visit copays and coinsurance
- Hospital stays and surgery costs
- Emergency room visits
- Specialist consultations
- Annual physicals and wellness exams
- Lab work and diagnostic tests (blood tests, X-rays, MRIs, CT scans)
- Ambulance services
Pro Tip
Even if your HDHP has not met its deductible yet, you can use HSA funds to pay for these services. Your HSA works regardless of where you are relative to your deductible.
Prescription Medications
All prescription drugs are qualified medical expenses. This includes:
- Medications for chronic conditions (blood pressure, cholesterol, diabetes, thyroid)
- Antibiotics and antivirals
- Prescription pain medications
- Prescription allergy medications
- Insulin (always qualifies, even without a prescription)
Over-the-Counter Medications and Products
CARES Act Expansion
The CARES Act of 2020 permanently expanded HSA-eligible expenses to include all over-the-counter medications and menstrual care products without requiring a prescription. This was one of the most significant expansions of HSA eligibility since the accounts were created in 2004.
Thanks to the CARES Act, these OTC items now qualify:
- Pain relievers (ibuprofen, acetaminophen, aspirin)
- Allergy medications (antihistamines, nasal sprays)
- Cold and flu medicines
- Antacids and digestive aids
- First-aid supplies (bandages, gauze, antiseptic)
- Menstrual care products (pads, tampons, cups, liners)
- Sunscreen (SPF 15 or higher)
- Acne treatments
- Anti-itch creams and hydrocortisone
Dental Care
Most dental expenses qualify, including:
- Cleanings and preventive care
- Fillings, crowns, and bridges
- Root canals and extractions
- Orthodontics (braces, retainers, Invisalign)
- Dentures and dental implants
- X-rays and dental anesthesia
Cosmetic dental procedures such as teeth whitening or veneers purely for appearance do not qualify unless they are medically necessary.
Vision Care
Vision expenses are broadly covered:
- Eye exams
- Prescription eyeglasses (frames and lenses)
- Contact lenses and contact lens solution
- Prescription sunglasses
- LASIK and other corrective eye surgery
- Reading glasses (even non-prescription)
Mental Health Services
Mental health care is fully covered:
- Therapy and counseling sessions (psychologist, psychiatrist, licensed counselor)
- Psychiatric treatment
- Substance abuse treatment and rehabilitation programs
- Inpatient mental health facility costs
- Prescription psychiatric medications
Preventive Care
Preventive services qualify, including:
- Vaccinations and immunizations
- Screening tests (mammograms, colonoscopies, skin cancer screenings)
- Smoking cessation programs and treatments
- Weight loss programs prescribed by a doctor for a specific diagnosed condition (obesity, hypertension, diabetes)
Expenses That Surprise People
Hidden Eligible Expenses Most People Miss
Beyond the obvious medical categories, the IRS allows HSA funds for a surprisingly wide range of items: hearing aids and batteries, chiropractic adjustments, acupuncture from a licensed practitioner, medical equipment (crutches, wheelchairs, blood pressure monitors, glucose monitors), travel costs for medical care (IRS mileage rate of 22 cents per mile for 2026, plus parking, tolls, and up to $50/night lodging), breast pumps and lactation supplies, guide dogs and service animals, and qualified long-term care services and insurance premiums up to age-based limits.
Travel for medical care deserves special attention. If you must travel to see a specialist or receive treatment at a distant facility, you can use HSA funds for transportation costs including airfare, the IRS standard mileage rate for driving, parking fees, tolls, and lodging up to $50 per night per person. These costs add up quickly for out-of-town medical care and represent real tax-free savings.
Long-term care services become increasingly relevant as account holders age. Qualified long-term care services and long-term care insurance premiums (subject to IRS age-based limits that increase each year) are eligible HSA expenses.
What Does NOT Qualify
Understanding exclusions is just as important as knowing what qualifies:
- Cosmetic surgery (face-lifts, liposuction, hair transplants) unless medically necessary
- Gym memberships and fitness equipment even if your doctor recommends exercise
- Nutritional supplements and vitamins unless prescribed for a specific diagnosed condition
- Teeth whitening (purely cosmetic)
- General health improvements (organic food, air purifiers, general wellness items)
- Health insurance premiums (with specific exceptions listed below)
- Toiletries and personal care items (toothpaste, soap, shampoo)
- Cosmetic contact lenses (colored lenses without a prescription)
Important
Using HSA funds for non-qualified expenses before age 65 triggers both income tax and a 20% penalty on the amount withdrawn. After age 65, the 20% penalty is waived but you still owe income tax. Always verify an expense qualifies before using your HSA debit card. Our expense checker tool can help you verify eligibility quickly.
The Insurance Premium Exception
Health insurance premiums are generally not HSA-eligible, but four important exceptions exist:
- COBRA continuation coverage premiums - fully qualified when you are continuing employer coverage after leaving a job
- Medicare premiums (Parts A, B, C, and D) - qualified once you are enrolled in Medicare at age 65 or older
- Premiums while receiving unemployment compensation - qualified while you are collecting unemployment benefits
- Qualified long-term care insurance premiums - qualified up to IRS age-based limits that increase annually
Regular employer-sponsored health insurance premiums, Marketplace/ACA plan premiums, and Medigap (Medicare supplement) premiums are not qualified expenses.
How to Verify an Expense
When you are unsure whether an expense qualifies, follow this process:
Check IRS Publication 502
IRS Publication 502 lists medical and dental expenses that qualify as itemized deductions under Section 213(d). HSA-eligible expenses follow the same definition. Search the publication for your specific expense, or use the IRS's online Interactive Tax Assistant tool for quick answers.
Contact Your HSA Provider
Most HSA providers maintain searchable databases of eligible expenses on their websites and mobile apps. Enter the expense description and the provider will confirm whether it qualifies. Some providers also offer eligibility lookup tools integrated into their purchase workflows.
Obtain a Letter of Medical Necessity
If the expense falls in a gray area, get a Letter of Medical Necessity (LMN) from your healthcare provider. This letter documents that the expense is medically necessary for a specific diagnosed condition. An LMN strengthens your case significantly if the IRS ever questions the withdrawal during an audit.
Record-Keeping Best Practices
The IRS does not require you to submit receipts when you make an HSA withdrawal, but you must be able to produce documentation if audited. IRS Publication 969 outlines the record-keeping requirements. Keep records that include:
- Date of service or purchase
- Description of the medical expense
- Amount paid
- Name of the provider or store
- Explanation of Benefits (EOB) from your insurance company, if applicable
Store these records for at least three years after filing the tax return that includes the HSA distribution. If you are using the receipt-hoarding strategy (paying out of pocket now and reimbursing yourself later), keep records indefinitely until you take the reimbursement.
Pro Tip
Create a dedicated digital folder in cloud storage for HSA receipts. After every medical purchase or appointment, photograph the receipt and the EOB. This takes seconds and protects you for years. Many HSA providers also offer built-in receipt storage within their apps.
Next Steps: Action Checklist
Written by
David is a licensed attorney and SHRM Senior Certified Professional who covers HSA compliance, IRS regulations, and employer benefits law. He previously practiced employee benefits law at a national firm.
