HSA Qualified Expenses - 53 Items To Maximize Your HSA Deductions
Using a HSA (Health Savings Account) with your federally qualified HDHP (High Deductible Health Plan) is a great way to provide health insurance to you and your family. Since the federal government has provided HSA's a tax advantaged status, it is important to know what expenses are allowed (and what is not allowed) so you don't get in trouble with the IRS.
Review the list below and make use of every HSA Qualified Expense you are eligible for. You may be surprised at some of the items on the list, because the government does allow for some medical expenses that are typically excluded from traditional health insurance plans.
What are HSA Qualified Expenses?
The government basically says that an expense incurred for the diagnosis, cure, mitigation, treatment, or prevention of disease, and the costs for treatments affecting any part or function of the body is allowable. This includes payments for legal medical services rendered by physicians, dentists, and other medical practitioners. You can also include costs of equipment, supplies, and diagnostic devices needed for the above mentioned items. However, medical expenses must be primarily to alleviate or prevent a physical or mental defect or illness. It does not allow for expenses that are merely beneficial to general health, such as vitamins or vacations.
The following list includes items that are commonly over-looked, but are considered HSA Qualified Expenses. Note, this list does not include all possible medical expenses, just some of the ones that may not be so obvious.
HSA Qualified Expenses
Alcoholism - Inpatient treatment, including meals & lodging. Also, transportation expense to and from Alcoholics Anonymous meetings if the attendance is pursuant to medical advice.
Birth Control Pills - If prescribed by a doctor.
Body Scans - Electronic body scans ordered by a doctor.
Braille Books & Magazines - Just the cost difference between a regular printed version and the version for the visually impaired.
Breast Pumps and Supplies - Medical expenses incurred that assist lactation.
Breast Reconstruction Surgery - Non-cosmetic purposes only, such as reconstruction surgery following a mastectomy for cancer.
Capital Equipment (i.e. Medically Required Home Improvements) - If the equipment/improvement/modification does not increase your property value, all of the expense is a HSA qualified expense. However, if the equipment/improvement/modification increases your property value, then only the difference is allowable. For example, you put an elevator in your home that cost you $15,000, but your property value increased $20,000, the difference is $5,000 and is the amount which is allowable. Some of the more common improvements include, but are not limited to, the following items:
Constructing entrance or exit ramps for your home
Widening doorways, both exterior and interior
Installing railings, support bars, or other bathroom safety modifications
Lowering or modifying kitchen cabinets and equipment
Moving or modifying electrical outlets and fixtures
Installing porch lifts and other forms of lifts (but elevators typically add value to the property)
Modifying fire alarms, smoke detectors, and other warning systems
Adding handrails or grab bars anywhere
Modifying hardware on doors
Modifying areas in front of entrance and exit doorways
Grading the ground to provide disabled access to the home
Only reasonable costs are allowed. Costs for architectural or aesthetic reasons are not HSA qualified expenses.
Car - much like your home, the cost for equipment/improvements/modifications necessary for the use of a person with a disability are allowed. Again, if it increases the value, only the difference is allowable.
Christian Science Practitioner
Community Living for the Intellectually and Developmentally Disabled - Allows the cost of keeping a person in a special home, (not a relative) on the recommendation of a psychiatrist to help the person adjust from life in a mental hospital to community living.
Contact Lenses - Can also include saline solution, enzyme cleaner, and other items required for using contacts.
Crutches - Either the cost to buy or rent is allowable.
Dental Treatment - Preventative treatment, such as teeth cleaning, sealants, fluoride are allowable. Also, X-rays, fillings, braces, extractions, dentures, etc. are also HSA qualified expenses.
Diagnostic Devices - You can include the medical expense of devices used in diagnosing and treating illness and disease, such as a blood sugar monitor for diabetics.
Disabled Dependent Care Expenses - Some disabled dependent care expenses may qualify as either:
Medical expenses, or
Work-related expenses for purposes of taking a credit for dependent care
Drug Addiction - Inpatient treatment at a therapeutic center for drug addiction, including meals and lodging at the center.
Eyeglasses - Eye exams, lenses, frames are allowable expenses.
Eye Surgery - You can include the amount you pay for eye surgery to treat defective vision, such as laser eye surgery or radial keratotomy.
Fertility Enhancement - Procedures to help overcome the inability to have children, such as in vitro fertilization (including temporary storage of eggs or sperm) and surgery to reverse prior sterilization surgeries.
Guide Dog or Other Service Animal - Costs of buying, training, and maintaining a service animal for the visually-impaired, hearing-impaired, or a person with other physical disabilities.
Health Insurance Plan Deductibles, Co-Pays and Co-Insurance
Health Institute - Only if prescribed by a physician and the physician issues a statement that the treatment is necessary to alleviate a physical or mental defect or illness.
Hearing Aids - Cost of the exam, hearing aid, and batteries used to operate it are HSA qualified expenses.
Lead-Based Paint Removal - Only the removal (not the repair) of surfaces in poor condition in homes with children.
Legal Fees - Legal fees necessary to authorize treatment for mental illness are allowable, but guardianship, estate fees, or other fees that are not necessary for medical care are not allowed.
Lodging - A person traveling with the person receiving medical care can allow up to $100 per night ($50 per person), for example a parent traveling with a sick child.
Medical Conferences - Admission and transportation to a medical conference if the medical conference concerns the chronic illness of yourself, your spouse, or your dependent. The majority of the time spent at the conference must be spent attending sessions on medical information.
Medicines - Prescribed medicines and drugs only. (Note: Beginning 1/1/2011 the Patient Protection and Affordable Care Act states that HSA funds can no longer be used for over-the-counter drugs without a doctor's prescription.)
Nursing Home - Medical reasons.
Osteopath - expenses paid to an Osteopath are considered HSA qualified expenses.
Oxygen - Oxygen and oxygen equipment to relieve breathing problems caused by a medical condition
Physical Exam - An annual exam and diagnostic tests are HSA qualified expenses even if you are not ill.
Pregnancy Test Kit
Psychiatric Care - Includes cost of supporting a mentally ill dependent at a specially equipped medical center.
Special Education - Medical expenses you pay on a doctor's recommendation for a child's tutoring by a teacher who is specially trained and qualified to work with children with learning disabilities caused by mental or physical impairments. You can also include the tuition, meals and lodging costs of attending a school that furnishes special education to help a child overcome learning disabilities. A doctor must recommend attendance. This includes:
Teaching Braille to the visually impaired
Teaching lip reading to the hearing impaired
Remedial language training to correct a condition caused by a birth defect
Stop Smoking Programs - Nicotine patches or gum are not covered, unless prescribed by a doctor.
Telephone - Cost of TTY & TDD, including repair and maintenance.
Transportation - Transportation expenses used primarily for, and essential to, medical care. Including, bus, taxi, train, plane, ambulance. Also includes transportation expense of a parent who must travel with a child and that of a nurse, required by a patient who is traveling to get medical care and is unable to travel alone.
Weight Loss Programs - Only if it is treatment for a specific disease diagnosed by a physician (i.e. obesity, hypertension, etc. ). You cannot include membership dues in a gym, health club, or spa, these are not considered HSA qualified expenses.
Wheelchair - Autoette or a wheelchair used mainly for the relief of sickness or disability, and not just to provide transportation to and from work.
Wig - A wig purchased upon the advice of a physician for the mental health of a patient who has lost all of his or her hair from disease.
Most people remember that hospital stays, doctors visits, and prescription drugs are HSA qualified expenses, but as you can see, the list of items that are considered HSA qualified expenses is very lengthy. Read IRS publication 502 for more details. Your HSA is intended to help you pay for medical expenses, so save your receipts to be sure that you can use those tax free funds to the fullest and maximize your tax write-offs.
However, if you use the HSA funds for something that is not considered HSA qualified expenses, you will not only receive no tax break, but also pay a 20% penalty. Make sure you also know the items that are NOT considered HSA qualified expenses.