HSA-Eligible Medical Expenses

An HSA lets you set aside pre-tax money for healthcare costs, but the IRS draws a clear line between expenses that qualify and those that do not. Understanding that line — and staying on the right side of it — keeps your account’s tax benefits intact and protects you from penalties. This page covers what qualifies, what does not, and how recent legislative changes expanded the list.

The IRS rule that governs eligibility

HSA eligibility follows the same standard that governs medical expense deductions on your federal tax return. The controlling authority is IRS Section 213(d) of the Internal Revenue Code, and the practical guide is IRS Publication 502: Medical and Dental Expenses. Under this rule, a qualifying medical expense must be primarily for the “diagnosis, cure, mitigation, treatment, or prevention of disease, or for the purpose of affecting any structure or function of the body.”

Expenses that are merely beneficial to general health — gym memberships, vitamins, toiletries — do not satisfy this standard and are not HSA-eligible, with limited exceptions. Each year the IRS updates Publication 502; always verify against the current version when a specific item is in question.

What is covered: medical expenses

The core of HSA-eligible spending is medical care you receive from licensed professionals. Eligible expenses include:

• Doctor visits — primary care, specialists, urgent care, emergency room
• Surgery and hospital stays — including anesthesia and post-surgical care
• Mental health care — therapy sessions, psychiatry, inpatient mental health treatment
• Physical therapy and occupational therapy when prescribed for a condition
• Chiropractic care — for treatment of diagnosed conditions
• Diagnostic tests — X-rays, MRIs, CT scans, laboratory tests, genetic testing for medical purposes
• Medical equipment — crutches, walkers, wheelchairs, blood pressure monitors, glucose meters
• Medical supplies — bandages, wound care, diabetic supplies, needles and syringes

What is covered: prescriptions and over-the-counter drugs

Prescription medications have always been HSA-eligible, and the CARES Act of 2020 meaningfully expanded the OTC category. Before 2020, you needed a doctor’s prescription to use HSA funds for over-the-counter drugs. Since the CARES Act took effect, that requirement is gone.

HSA-eligible medications and related items now include:

Category	Examples
Prescription drugs	Any medication prescribed by a licensed provider
Over-the-counter pain relief	Aspirin, ibuprofen, acetaminophen, naproxen
OTC allergy medication	Antihistamines, decongestants, nasal sprays
OTC digestive aids	Antacids, acid reducers, anti-diarrheal products
OTC cold and flu medications	Cough suppressants, expectorants, combination cold medicines
Insulin	Both prescription and OTC insulin products
Menstrual care products	Pads, tampons, menstrual cups, period underwear (added by CARES Act 2020)

The addition of menstrual care products was a significant change that many account holders still do not know about. These products are now permanently eligible.

What is covered: dental expenses

Most dental care qualifies, with one notable exception:

• Eligible: cleanings, exams, X-rays, fillings, crowns, root canals, tooth extractions, dentures, dental implants, braces and orthodontia, treatment of gum disease
• Not eligible: teeth whitening and bleaching — these are cosmetic, not medical

Orthodontia for a diagnosed functional issue (not just cosmetic alignment) is eligible. Whitening treatments applied during a dental visit to treat a diagnosed condition are a gray area worth discussing with your dentist in writing before incurring the cost.

What is covered: vision expenses

Vision care is broadly covered:

• Eligible: eye exams, prescription eyeglasses, contact lenses and lens solutions, prescription sunglasses, LASIK and other corrective vision surgery
• Not eligible: purely cosmetic contact lenses (colored lenses with no vision correction), reading glasses (these are OTC items without a prescription, though standard reading glasses are a gray area post-CARES Act)

What is not covered

The IRS exclusions catch many expenses that might seem health-related:

• Cosmetic procedures — Botox for aesthetic purposes, hair removal, hair transplants, teeth whitening, liposuction
• General wellness — gym memberships, fitness trackers, exercise equipment, vitamins and supplements (unless prescribed for a specific deficiency)
• Personal care — toothpaste, soap, shampoo, cosmetics, skin moisturizers (even medicated varieties, in most cases)
• Non-prescription sunscreen — was not eligible historically, though proposed rule changes have been discussed; verify current IRS guidance
• Diet foods — even if recommended by a physician for weight management
• Maternity clothes — not a medical expense
• Babysitting and childcare — covered by FSA dependent care accounts, not HSAs

Documents and terms you’ll see

When managing HSA spending and documentation, these terms appear regularly:

• IRS Publication 502 — the IRS guide that defines qualifying medical and dental expenses; your starting point whenever a specific item is in question
• Qualified medical expense — the IRS term for an HSA-eligible expense; using HSA funds for a non-qualified expense triggers tax and a penalty
• CARES Act — the 2020 law that expanded eligible OTC purchases and added menstrual care products to the eligible list permanently
• Explanation of benefits — the document your insurer sends after a claim; useful documentation for HSA withdrawal records

The record-keeping requirement

The IRS does not require you to submit receipts when you spend HSA money — but it can audit you and ask you to prove that distributions matched qualified expenses. Your responsibility is to keep records — receipts, invoices, EOB documents — that tie each withdrawal to a specific eligible expense. Most HSA administrators allow you to upload and store receipts within your online account, which simplifies this process.

Records should be retained for at least three years, the standard IRS audit window, though some advisors recommend keeping them longer for large transactions.

Using HSA funds for a non-eligible expense: the consequences

If an audit reveals an HSA distribution was used for a non-qualifying expense:

1. The amount is added to your taxable income for the year of the distribution.
2. A 20 percent penalty is assessed on top of the income tax.

The penalty disappears at age 65. At that point, non-qualified HSA withdrawals are treated like distributions from a traditional IRA — taxable as ordinary income but not penalized. This makes an HSA a useful supplemental retirement account for those who stay healthy and spend little on medical care before 65.

For a comparison of HSA rules against FSA and HRA accounts — which have different eligibility lists and rollover rules — see the hsa-vs-fsa-vs-hra page, and the broader health savings accounts guide for contribution limits and account mechanics.