Health Savings Accounts
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Qualified Medical Expense Guidelines
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, as well as over-the-counter drugs such as aspirin. For
a detailed list of eligible medical expenses, please refer to IRS Publication 502 found at www.irs.gov.
Generally, you cannot use the money tax-free to pay for medical insurance premiums, except under specific circumstances, including:
- Any health plan coverage while receiving federal or state unemployment benefits
- COBRA continuation coverage after leaving employment with a company that offers health insurance coverage,
qualified long-term care insurance, 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 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 10% penalty. After you turn 65, the 10% 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 10% penalty.
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