For a complete list of eligible medical expenses, see Publication 502, Medical and Dental Expenses.
Which Insurance Premiums Qualify for HSA Purposes?
Most health insurance premiums are not qualified medical expenses for HSA distributions. However, the IRS allows HSA funds to be used tax-free for certain types of coverage, including:
- Qualified long-term care insurance
- Health care continuation coverage, such as COBRA
- Health insurance coverage while receiving federal or state unemployment benefits
- Medicare and other health coverage if you're age 65 or older (excluding Medicare supplemental policies such as Medigap)
What Should I Enter as Unreimbursed Qualified Medical Expenses?
When reporting HSA distributions, include only amounts that were used to pay or reimburse qualified medical expenses incurred after your HSA was established.
Generally, you can include expenses paid for:
- Yourself
- Your spouse
- Dependents claimed on your tax return
- Individuals you could have claimed as dependents except they:
- Filed a joint tax return,
- Had gross income above the applicable IRS dependent income limit, or
- Could be claimed as a dependent on someone else's return
Do not include:
- Expenses that were reimbursed by insurance or another source
- Distributions of excess HSA contributions withdrawn after the tax return due date
- Medical expenses that you also claim as an itemized deduction on Schedule A
Important: The same medical expense cannot be used twice. If you use an expense to justify a tax-free HSA distribution, you cannot also claim that expense as a Schedule A medical deduction.
Do Over-the-Counter Medications Count as Qualified Medical Expenses?
Yes, under current IRS rules, many over-the-counter (OTC) medicines and drugs qualify as HSA-eligible medical expenses without a prescription. This change was made by the CARES Act and remains in effect.
Keep your receipts and records in case the IRS requests documentation.
Can I Use HSA Funds for Expenses Incurred Before My HSA Was Opened?
No, qualified medical expenses must be incurred after your HSA has been established. Expenses incurred before the account was opened do not qualify for tax-free HSA distributions. IRS Publication 969 provides additional guidance on determining when an HSA is considered established.