Qualified Medical ExpenseS
You can use the money in your HSA to pay for any Qualified Medical Expense permitted under federal tax law. This includes most medical care and services, dental and vision care. For a detailed list of eligible medical expenses, please refer to IRS Publication 502.
Generally, you cannot use the money tax-free to pay for medical insurance premiums, except under specific circumstances, which includes the following:
- Any health plan coverage while receiving federal or state unemployment benefits
- COBRA continuation coverage after leaving employment with a company that offers health coverage
- Qualified Long-Term Care (LTC) insurance (premium based on age limits)
- Medicare premiums and out-of-pocket expenses, including deductibles, co-pays and coinsurance for:
° Part A (hospital and inpatient services)
° Part B (physician and outpatient services)
° Part C (Medicare HMO and PPO plans)
° Part D (prescription drugs)
You can use the money in the account tax-free to pay for medical expenses for yourself, your spouse and your dependent children. You can pay for the expenses of your spouse and dependent children even if they are not covered by your High Deductible Health Plan (HDHP).
You can use funds in your HSA for any purpose, but any amounts used for purposes other than to pay for “qualified medical expenses” are taxable as income to you and subject to an additional 20% penalty. After you turn 65, the 20% additional penalty no longer applies. If you become disabled and/or enroll in Medicare, you can use the HSA for other purposes without paying the additional 20% penalty.
To download the partial list of eligible or ineligible qualified medical expenses, click here. The listing is subject to IRS rules and regulations under code section 213(d). See IRS Publication 502 for further detailed descriptions.