What Can Your HSA Be Used For

Your HSA is an empowering tool. It encourages you to take control of your own health and wellness by allowing you to budget better and save money for important healthcare-related purchases. Your HSA can be used to pay for a wide variety of things. You may even be able to get additional eligibility for your special needs by speaking to your doctor. Here’s what your HSA can be used for and how to expand your eligibility. 

What Is an HSA?

A health savings account is a special bank account used to store pre-tax money that’s been earmarked specifically for health and wellness-related purchases. HSA funds can make up the gaps between what your insurance pays and what you’re expected to pay. 

HSA funds can also be used to pay for many health and wellness necessities, including over-the-counter medicines and other supplies you’d use to stock your medicine cabinet.

How Does an HSA Work?

HSA accounts are available to people who meet specific requirements with their health insurance plans. 

An HSA works almost exactly the same way as a normal bank account in practice, but you’re limited in what you can purchase with HSA funds. You can open an HSA at most banks and credit unions, likely including the one you already use. Some insurance companies offer HSA accounts to policyholders. 

You can make deposits of pre-tax money and withdrawals from your HSA account like a normal bank account. You can even accumulate interest on the funds you deposit. Your withdrawals can be used to reimburse yourself for eligible purposes. Be mindful, though — if you withdraw money and use it for something other than an eligible purchase, you’ll pay a 10% tax penalty on the money you withdrew. 

You justify the money you spent from your HSA by keeping receipts and supporting documents to prove your funds were used on eligible items. If it all checks out, you don’t have to pay taxes on any of the money you spent using your HSA.

How Is an HSA Different From an FSA?

A health savings account (HSA) is different from a flexible spending account (FSA) in a few fundamentally important ways. They often cover many of the same things, but they have little in common with how they work. 

You’re always in control of your own HSA. You control the contributions and withdrawals that you make. The account belongs solely to you and the funds never expire. That’s why HSAs are so great for entrepreneurs, independent contractors, and small business owners. 

An FSA (flexible spending account) is controlled by an employer who will often match contributions up to a certain threshold. Your employer has control over the account. Any unused funds will expire at the end of the year. If you stop working for that employer, you’ll lose access to your FSA and any funds that may still be sitting in the account. 

What Can Your HSA Be Used For?

Your HSA can be used for almost everything in the pharmacy section of your local grocery or big box store, in addition to paying for obvious medical necessities like co-pays. HSA funds can cover almost anything that would generally be recognized as an immediate medical need. 

Medical Care and Devices

Medical care and devices can be paid for using an HSA (health savings account). This makes HSAs a practical option for funding a wide range of medical-related costs, including treatments, procedures, and medically necessary devices, thereby easing the financial burden of healthcare.

Examples include:

• Treatment co-pays
• Prescription co-pays
• Necessary medical devices (crutches, wheelchairs, prosthetic limbs)
• Hearing devices
• Dental costs, like dentures
• Contact lenses and glasses
• Prescription braces and orthotics
• Diabetes care supplies like glucose meters and test strips

Over-the-Counter Medicine

Over-the-counter (OTC) medicine is eligible for purchase using an HSA (health savings account) because these items are considered necessary healthcare expenses. The inclusion of OTC medicines expands the range of accessible health-related products for HSA holders, allowing them to use pre-tax dollars for a broader spectrum of health care needs, including those that don't require a doctor's prescription. 

Examples of OTC medicines that you can use your HSA funds for are as follows:

• Pain relievers and anti-inflammatory medications
• Antihistamine and allergy relief products (tablets, liquids, and nasal sprays)
• Antacid tablets, gas meds, and nausea meds
• Cold and flu medicine
• Treatment for cold sores and canker sores
• Chapstick
• Cough drops
• Electrolyte drinks and dehydration solutions
• Non-prescription sleep aids

Pregnancy and Reproductive Health

Pregnancy and reproductive health products are eligible for purchase using HSA funds because they are considered essential health care expenses. These products are integral to reproductive health and family planning.

Pregnancy and reproductive health products you can use your HSA for include:

• Ovulation and pregnancy tests
• Spermicide, condoms, and birth control
• The morning-after pill
• Feminine hygiene products (like tampons)
• Medicated creams and inserts
• Breast pumps and lactation pads
• Pregnancy and lactation service care providers

Special Skincare Products

Certain skincare products aimed at treating or managing skin conditions are generally also HSA eligible. These include:

• Medicated face and body washes and treatments (like for acne, eczema, and psoriasis)
• Sun care products (like sunscreen)
• Lotions with targeted formulas (i.e. eczema relief, diabetic skin care)
• Treatment cream for rashes, itching, bug bites, and burns
• Pain relief roll-ons, creams, and gels

First Aid and Wound Care 

First aid and wound care products are eligible for purchase using HSA funds because they are considered necessary for basic healthcare and emergency treatment. 

Examples of HSA-eligible first aid and wound care products include:

• First aid kits
• Wound protection (like bandages, liquid bandages, and gauze)
• First aid antibiotic ointments and salves
• Wound cleaning sprays and liquids (alcohol, peroxide)
• Hand sanitizer 
• Burn care products
• Wraps and slings
• Ice packs and heat packs
• Numbing gels and sprays

What If I Need Something My HSA Doesn’t Cover?

Medicine is a lot more complex than something that comes in a pill bottle or a tube. Medicine is the decision we make to manage our well-being. It isn’t always obvious that something like bone broth or a gym membership is a medical purpose, but most doctors can easily justify that their patients would significantly benefit from those things. 

That’s when a Letter of Medical Necessity becomes an important tool. If your doctor believes that something not ordinarily covered by your HSA would be a medical necessity for you, you may be allowed to make that purchase HSA-eligible with a Letter of Medical Necessity. 

What Can Your HSA Be Used For With a Letter of Medical Necessity?

A Letter of Medical Necessity can open the door to new health and wellness possibilities through HSA eligibility. If your doctor agrees that you would benefit from any of these things, you may be able to use your HSA funds to purchase them. You only need one letter to justify your purchases for the year. 

With a Letter of Medical Necessity, you could use your HSA for items like bone broth, vitamins and supplements, gym memberships, workout equipment, and even hot tubs and saunas — all because you’ve been given approval from your doctor.

How To Use Your HSA

When you’re ready to make an HSA-eligible purchase, there are two ways to go about the process. The first is not much different from using a normal bank card. The second way is a bit more involved. No matter how you choose to make your HSA purchase, don’t forget to save the receipt for your records. 

Use Your HSA Debit Card

Most financial institutions that offer their clients HSA accounts will issue a debit card directly to that account. It works exactly like any other debit card. You can use it in-store or online to check out with HSA-eligible items. Save your receipt or invoice as proof of purchase. 

Reimburse Yourself From Your HSA

If you’re shopping with a retailer that doesn’t offer HSA payment processing or if you don’t have an HSA debit card, you have the option to reimburse yourself. You can pay for HSA-eligible goods or services with your own personal funds and reimburse yourself from your HSA account. You can reimburse yourself by check, bank transfer, or withdrawal for the total amount you spent on eligible purchases. 

It can be cumbersome to reimburse yourself every time you spend $3 on a box of bandages. You don’t have to reimburse yourself immediately. You have an infinite amount of time to reimburse yourself after you’ve made an HSA purchase as long as you’ve kept the receipt and maintained an HSA account in good standing. 

Some people prefer to wait until they’ve reached a specific dollar amount to reimburse themselves for their purchases. You can hold off until you’ve reached your desired minimum to make it worth the effort (like $100) or to allow your HSA to accumulate interest. 

Truemed’s Process

Truemed is working to simplify the process of using your HSA, making health and wellness that much more accessible. With Truemed, just choose “Pay With Truemed” at checkout with one of our merchants, and enter your payment details into the system. 

From there, you’ll be prompted to answer a few questions about your health circumstances, and then we’ll match you with a healthcare provider to determine your eligibility. If you do qualify, you’ll receive a Letter of Medical Necessity for your purchase, which allows you to use your HSA or FSA funds.

Make the Most of Your HSA Funds

HSA funds cover a lot of important medical expenses outright. For medical expenses that are a little bit outside of the box, a Letter of Medical Necessity can open new doors. 

If you’re a retailer that offers HSA-eligible products and services, Truemed makes it easy for you to allow your customers to use their HSA account to check out. Contact us about a quick and simple integration that will empower your customers to take control of their own health needs.

Sources:

Health Savings Account (HSA) - Glossary | HealthCare.gov

Individuals Who Qualify for an HSA | IRS

Health Care Options, Using a Flexible Spending Account FSA | HealthCare.gov

2022 Publication 969 Health Savings Accounts and Other Tax-Favored Health Plans | IRS