What Can I Use My HSA Funds On?

If you've just opened a Health Savings Account (HSA) or you've had one for a while, you might be wondering what qualifies as an HSA-eligible expense. Below is a straightforward guide to help you understand how you can use your HSA funds, along with some handy resources to confirm whether a particular expense is eligible.

1. Qualified Medical Expenses

In general, the IRS states that HSA funds can be used for qualified medical expenses. Here are some common categories:

• Doctor Visits & Hospital Services:

  • Primary care, specialist visits, surgeries, and hospitalization costs.

• Prescription Drugs & Certain Over-the-Counter (OTC) Items:

  • OTC medications (e.g., pain relievers, allergy medicines, cold/flu remedies) often qualify if they meet specific IRS criteria (though some may require a prescription or Letter of Medical Necessity).

• Dental & Vision Care:

  • Routine exams, treatments, and procedures such as fillings, crowns, glasses, and contact lenses.

• Medical Equipment & Supplies:

  • Items like crutches, wheelchairs, hearing aids, and diabetic testing supplies (though some may require a prescription or Letter of Medical Necessity).

• Therapy & Mental Health Services:

  • Physical therapy, counseling, and other recognized treatments.

For more detail on eligible expenses, refer to IRS Publication 502 (Medical and Dental Expenses) and IRS Publication 969 (Health Savings Accounts and Other Tax-Favored Health Plans).

2. Using the Burst Chrome Extension

Determining eligibility of various items or services can sometimes be confusing, especially since guidelines vary between HSA providers. That's where the Burst Chrome Extension can help:

• Automatic Guidance: It flags HSA-eligible products as you shop online, making sure to abide by your provider's rules.

• Database of Eligible Items: It keeps track of IRS-compliant expenses, making it easier to see which purchases may qualify under HSA guidelines.

• Letter of Medical Necessity Detection: If an item requires a letter of medical necessity (LMN) to be eligible, the extension can both alert you and provide the required LMN.

• Time-Saving: No need to comb through detailed IRS documents when you're casually browsing; the extension provides quick, in-the-moment assistance.

3. Expenses That Typically Do Not Qualify

While HSAs offer flexibility, certain expenses usually don't qualify:

• Cosmetic Procedures: Such as teeth whitening or plastic surgery for purely aesthetic reasons.

• General Health Products: Items like gym memberships, vitamins for general health, or personal hygiene products unless prescribed for a specific medical condition.

• Non-Medical Expenses: Using HSA funds for non-medical purchases can lead to tax penalties.

Always cross-reference questionable items with official IRS guidelines or tools like the Burst Chrome extension to ensure compliance.

4. Tax Advantages & Avoiding Penalties

• Tax-Free Spending: When you use HSA money for qualified medical expenses, your purchases are tax-free.

• Penalties for Ineligible Purchases: If you spend your HSA funds on non-qualified items or services, you may face taxes plus an additional 20% penalty (if under age 65).

5. Checking Eligibility

Here are a few ways to confirm whether a specific expense is eligible:

1. Consult IRS Publications: Review IRS Publication 502 and Publication 969.

2. Use Burst: The Burst Chrome Extension offers real-time assistance for HSA eligibility (including detecting LMN requirements) while you shop online.

3. Ask Your HSA Provider: If you're still unsure, contact your HSA provider's customer service or consult a tax professional.

In Summary

Your HSA can be a powerful tool to manage healthcare costs while enjoying significant tax advantages. From doctor visits to prescription drugs—and even certain over-the-counter items—you have a wide range of eligible expenses. To make the most of your HSA, stay informed of the IRS guidelines, leverage tools like the Burst Chrome Extension for quick checks (including LMN requirements), and keep track of your qualified spending throughout the year.

If you have additional questions or unique circumstances, be sure to speak with a tax advisor or healthcare benefits specialist for personalized guidance. Feel free to reach out to the Burst Team too – we'd be happy to help.