HSA funds can be used tax-free for a wide range of medical, dental, and vision expenses, plus certain over-the-counter medications, menstrual products, and even some insurance premiums. The IRS defines qualified expenses broadly: anything that diagnoses, cures, treats, or prevents disease, or affects any structure or function of the body. That covers far more than most people realize.
Medical, Dental, and Vision Expenses
The core of HSA-eligible spending is straightforward healthcare. On the medical side, that includes doctor visits, inpatient hospital stays, ambulance services, lab work, physical exams, psychiatric care, surgery, and prescription medications. If your doctor orders it or prescribes it, it almost certainly qualifies.
Dental expenses go well beyond cleanings. X-rays, fillings, braces, extractions, dentures, and root canals are all eligible. Vision expenses include eye exams, prescription eyeglasses, contact lenses, and corrective eye surgery like LASIK. Basically, if it fixes or maintains your teeth or eyes, your HSA covers it.
Other commonly overlooked qualified expenses include chiropractic care, acupuncture, hearing aids, physical therapy, and durable medical equipment like crutches, blood pressure monitors, or CPAP machines.
Over-the-Counter Medications and Products
Since 2020, over-the-counter medications no longer require a prescription to be HSA-eligible. That opened the door to a long list of drugstore staples you can buy with your HSA card or reimburse yourself for later.
Pain relievers like Tylenol, Advil, and Excedrin qualify. So do allergy medications (Allegra, Benadryl, Claritin-D, Xyzal, Nasacort), cold and cough remedies (DayQuil, Robitussin, Delsym, Halls cough drops), and heartburn treatments (Nexium, Prilosec, Pepto-Bismol, Pepcid AC, Rolaids). Acne treatments containing salicylic acid, like Neutrogena Oil-Free Acne Wash and CeraVe Acne Control Gel, are eligible, along with eczema creams like Aveeno Eczema Therapy. Dental care products like Orajel and denture cleaners count too.
Children’s versions of these medications are equally eligible. Children’s Tylenol, Mucinex Children’s Cough Mini-Melts, and similar pediatric OTC products all qualify.
Menstrual care products are also HSA-eligible: tampons, pads, liners, and menstrual cups all count as qualified expenses.
Items That Need a Doctor’s Letter
Some expenses sit in a gray area where they’re only eligible if a doctor says they’re medically necessary. A letter of medical necessity (sometimes called an LMN) is a note from your physician stating that a specific product or service is needed to diagnose, treat, or prevent a medical condition.
The classic example is a gym membership. Normally, that’s not an HSA-eligible expense. But if your doctor writes a letter saying a structured exercise program is needed to treat a specific condition, like hypertension or obesity, the cost can become qualified. The same logic applies to things like massage therapy, nutritional supplements, or ergonomic equipment. Without the letter, these are personal expenses. With one, they can become tax-free HSA purchases.
Insurance Premiums: Limited but Important
Generally, you cannot use HSA funds to pay health insurance premiums. But the IRS carves out four notable exceptions:
- COBRA continuation coverage. If you leave a job and elect to continue your employer plan through COBRA, HSA funds can cover those premiums.
- Coverage while receiving unemployment. If you’re collecting unemployment benefits, you can use HSA money for health coverage premiums during that period.
- Long-term care insurance. Premiums for long-term care policies are HSA-eligible up to annual limits that increase with your age.
- Medicare premiums after age 65. Once you turn 65, you can use HSA funds for Medicare Part A, Part B, Part D, and Medicare Advantage premiums. The one exclusion: Medigap (Medicare Supplement) premiums do not qualify.
The COBRA and unemployment exceptions also apply when you’re covering a spouse or dependent who qualifies for that type of coverage. The Medicare exception, however, only applies if you, the account holder, are 65 or older. You generally can’t use your HSA to pay Medicare premiums for a spouse who’s 65 if you haven’t reached that age yourself.
What HSA Funds Cannot Cover
Not everything health-related qualifies. Cosmetic procedures that don’t treat a medical condition, like teeth whitening or elective cosmetic surgery, are not eligible. General toiletries like toothpaste, shampoo, and basic moisturizers don’t count. Vitamins and supplements are typically ineligible unless your doctor provides a letter of medical necessity for a specific condition.
Health insurance premiums outside the four exceptions listed above are off-limits. That means you can’t use HSA funds to pay your regular monthly premium for an employer-sponsored health plan or an individual marketplace plan.
Using HSA Funds After Age 65
Your HSA becomes even more flexible once you turn 65. You can still use funds tax-free for any qualified medical expense, just as before. But the penalty for non-medical withdrawals disappears entirely.
Before age 65, taking money out of your HSA for non-medical purchases triggers a steep 20% penalty on top of ordinary income tax. After 65, that penalty goes away. You’ll still owe income tax on non-medical withdrawals, making it work essentially the same as a traditional IRA or 401(k) at that point. This makes your HSA a powerful backup retirement account: use it tax-free for healthcare, or use it for anything else and just pay regular income tax.
How Reimbursement Works
You don’t have to spend HSA funds at the time of purchase. The IRS lets you reimburse yourself for qualified expenses at any point in the future, as long as the expense occurred after your HSA was established. That means you can pay out of pocket for medical costs today, let your HSA investments grow, and withdraw the money years later, completely tax-free.
Keep your receipts. There’s no deadline for reimbursement, but you’ll need documentation if the IRS ever asks. Save itemized receipts, explanation of benefits statements, and any letters of medical necessity in a place you can access long-term.