Today we will tackle some common HSA eligibility questions. To review quickly, an HSA is a health savings account that is paired with a high-deductible health plan. These accounts can be contributed to with pre-tax money, will grow in a tax-free account, and then can be expensed on eligible medical items or converted to an IRA at age 65. HSA accounts are one of my favorite health insurance related topics and are incredibly powerful for saving money.
Quick guide:
- How to use an HSA
- Lasik
- Botox
- Spouse/kids/pets
- Vasectomy
- Cosmetic procedure
- Chiropractor
- A list of items that are eligible with medical exceptions
How do I use my HSA?
To use your HSA, you must have funds in your account. During open enrollment (generally Oct-Nov for most employers), make sure to pick how much money you want to go into your account each pay period. There is a maximum amount each year that you can contribute to an HSA. The maximum is different for individuals ($3,600) and families ($7,200). The amounts roll over each year as well.
You can of course contribute to your HSA with after-tax money, but you don’t gain the tax benefits provided by direct deposit until your refund comes.
What can I use my HSA for?
This is a great question! There isn’t a clear handbook for every single item that you can purchase with an HSA. The IRS publishes a list of eligible items each year in broad terms with certain specifications. Obviously, you want to be compliant with this list and interpret it carefully. It is very clear that most cosmetic procedures will not be covered by your HSA. If you use your HSA for non-eligible items, you must report them to the IRS and pay taxes on the amount spent.
Can I use my HSA for Lasik?
Yes! This is an HSA eligible expense and is allowed by the IRS. If you have an HSA and are considering Lasik eye surgery, take comfort knowing that you will be able to access HSA funds to pay for the procedure.
Can I use my HSA for Botox?
No! Not completely no, but you cannot use your HSA for this type of cosmetic procedure, assuming this is for your face. You can use your HSA for Botox in the treatment of migraines, but I doubt this is why you searched for this.
Can I use my HSA for my spouse? My kids? My dog?
You can use your personal HSA for other people in your family! If your plan includes your spouse and children for coverage, then your HSA is really the family’s HSA and includes everyone.
You cannot use your HSA or even your family HSA for your pets, even though they feel like family.
Can I use my HSA for over the counter medications, like Advil and Tylenol?
Yep! That’s new in 2021 under the CURES act.
Can I use my HSA for a vasectomy?
Sure! And also for a vasectomy reversal in case you change your mind (ouch).
Can I use my HSA for cosmetic procedures?
Only if it is correcting a deformity or scar, not just for general aesthetics!
Can I use my HSA for the chiropractor?
Yep, as long as it is for a medically-diagnosed condition.
Exceptions
If you have a medical diagnosis that requires you to receive any of the below, you can use your HSA to pay for them:
- Massage therapy
- CBD
- Breast implant removal
- Vitamins
- A wig
- Toothbrushes and toothpaste
- Home improvement projects if accommodating for a medical issue
Bottom Line
HSAs are incredibly flexible and powerful tools for health expenses and wealth building. Use them generously, but also cautiously adhering to the IRS requirements.
