Can an HSA Be Used for Long-Term Care Costs?

Yes, an HSA can be used for long-term care. Health savings account funds pay tax-free for qualified long-term care services and for premiums on a qualified long-term care insurance policy, with two important limits: insurance premium payments are capped each year based on the account holder’s age, and direct care costs qualify only when the person receiving care has been certified as chronically ill by a licensed health care practitioner.

Long-Term Care Insurance Premiums

You can pay premiums on a qualified long-term care insurance policy from your HSA, but only up to an age-based annual cap. Anything above the cap counts as a non-qualified distribution, which means income tax on the excess and a possible 20 percent penalty if you are under 65.¹

For the 2026 tax year, the tax-free premium limits are:

Age 40 or younger: $500
Age 41 to 50: $930
Age 51 to 60: $1,860
Age 61 to 70: $4,960
Over age 70: $6,200

The caps adjust each year for medical cost inflation, rounded to the nearest $10.² “Age” is your attained age before the close of the taxable year, so someone who turns 51 at any point in 2026 falls in the 51-to-60 bracket for the whole year.

What Makes a Policy Qualified

Not every long-term care policy qualifies. Under the tax code, a qualified long-term care insurance contract must:³

Cover long-term care only, without bundling other insurance
Have no cash surrender value and not be usable as collateral
Be guaranteed renewable as long as premiums are paid
Not reimburse expenses already covered by Medicare
Apply any refunds or dividends to reduce future premiums or increase future benefits rather than being paid as cash

Hybrid products that combine life insurance with a long-term care rider may fail one or more of these tests. If a policy does not meet every requirement, premiums paid from an HSA are not qualified medical expenses.

Direct Payment for Long-Term Care Services

Beyond insurance, HSA funds can pay directly for long-term care services when two conditions are met: the care must be required by someone who is chronically ill, and it must be provided under a written plan of care from a licensed health care practitioner.⁴

Eligible services include diagnostic testing, therapy, and rehabilitation, along with hands-on personal care such as help with bathing, dressing, eating, or moving around.³ Personal care qualifies only when it is needed because of the chronic illness. Help provided purely for convenience or general well-being does not count.

The written plan of care matters. Without it, the IRS can reclassify withdrawals as non-qualified distributions. The plan must be prescribed by a physician, registered professional nurse, licensed social worker, or another practitioner who meets IRS requirements.³ Keep the plan and receipts with your tax records.

Who Counts as Chronically Ill

A licensed health care practitioner has to certify chronic illness, and there are two paths to that certification.⁴

The first is the activities of daily living test. A person qualifies if they cannot perform at least two of six activities without substantial help from another person, and the limitation is expected to last at least 90 days. The six activities are eating, toileting, transferring (moving between a bed and a chair, for example), bathing, dressing, and continence.³

The second is the cognitive impairment test. A person qualifies if they have a severe cognitive impairment, such as Alzheimer’s disease or another form of dementia, that requires substantial supervision to protect their health and safety.³ The impairment has to be documented through medical records or standard clinical assessments.

Either way, the certification must be current. The IRS requires that certification have been made within the previous 12 months, so it effectively needs annual renewal.⁴ If it lapses, later withdrawals for care can be treated as non-qualified distributions.

Nursing Homes, Assisted Living, and In-Home Care

Facility and in-home care each follow their own version of the same test: is the arrangement primarily for medical care, or primarily for personal reasons?

Nursing Home Costs

If the main reason a person is in a nursing home is to receive medical care, the entire cost, including meals and lodging, is a qualified medical expense.⁵ If the main reason is non-medical, only the portion attributable to actual medical or nursing care qualifies, and room and board do not.⁴

Assisted Living

The same distinction governs assisted living. When a chronically ill person lives in an assisted living facility primarily to receive care under a written plan of care, the full facility cost, including room and board, can qualify. When residency is primarily for personal convenience, only the medical-care portion qualifies.

Home Health Aides

In-home personal care qualifies for tax-free HSA reimbursement when it is part of a written plan of care for a chronically ill individual. The caregiver does not have to be a nurse. Personal care aides qualify as long as the services they provide appear in the care plan.

Home Modifications

Certain home improvements made to accommodate a disability qualify as medical expenses. The IRS identifies modifications that generally do not increase a home’s value and therefore qualify in full:⁴

Entrance and exit ramps
Widened doorways and hallways
Bathroom railings, grab bars, and support bars
Porch lifts and stairway modifications
Lowered kitchen cabinets and equipment
Modified fire alarms and warning systems
Grading the ground for wheelchair access

When a modification does increase the home’s value, an elevator being a common example, only the cost that exceeds the increase in value qualifies. Ongoing operation and upkeep of these modifications also qualify as long as the primary purpose remains medical care.

Paying for a Spouse or Parent

An HSA is not limited to the account holder’s own care. You can use it tax-free for qualified medical expenses, long-term care included, of your spouse or anyone who qualifies as your dependent.⁶ The family member does not have to be covered by your High Deductible Health Plan.

The definition of “dependent” for this purpose is broader than the standard income tax definition. The tax code removes the gross income test when determining whether a relative qualifies as your dependent for medical-expense purposes.⁶ For elder care, this means an aging parent whose Social Security income would ordinarily disqualify them can still be treated as a dependent for HSA withdrawal purposes, provided they meet the other dependency requirements, such as receiving more than half their support from you.

The rest of the rules still apply. The care recipient must be certified as chronically ill, services must follow a written plan of care, and any insurance premium reimbursements are subject to the same age-based caps, using the age of the person the policy covers.

Medicare Enrollment Stops New Contributions

Once you enroll in any part of Medicare, including Part A, your HSA contribution limit drops to zero.⁶ Part A enrollment is automatic for many people who claim Social Security benefits, so this can happen without a separate decision. New contributions stop, but the existing balance remains fully usable for qualified medical expenses, including long-term care, for the rest of your life.

After age 65, HSA funds can also pay tax-free for Medicare Part B, Part D, and Medicare Advantage premiums.⁷ Medigap (Medicare Supplement) premiums are the exception and are not qualified medical expenses.

If you plan to work past 65 without enrolling in Medicare so you can keep contributing, timing matters. Retroactive Medicare enrollment can reach back up to six months, which can create a stretch where contributions were technically ineligible.

What Non-Qualified Withdrawals Cost

If HSA funds come out for something other than a qualified medical expense, the distribution is added to taxable income and hit with an additional 20 percent penalty.⁶ On the long-term care side, the two most common triggers are paying insurance premiums above the age-based limit and reimbursing care expenses for someone who has not been certified as chronically ill within the past 12 months.

The 20 percent penalty no longer applies once you reach age 65, become disabled, or die (in which case it does not apply to the beneficiary).⁶ After 65, non-qualified withdrawals are still taxed as ordinary income, but without the additional penalty.

1
Office of the Law Revision Counsel. 26 USC 213 – Medical, Dental, Etc., Expenses
2
Internal Revenue Service. IRS Notice 2025-67
3
Office of the Law Revision Counsel. 26 USC 7702B – Treatment of Qualified Long-Term Care Insurance
4
Internal Revenue Service. Publication 502 (2025), Medical and Dental Expenses
5
Internal Revenue Service. Medical, Nursing Home, Special Care Expenses
6
Office of the Law Revision Counsel. 26 U.S. Code 223 – Health Savings Accounts
7
Internal Revenue Service. Publication 969 (2025), Health Savings Accounts and Other Tax-Favored Health Plans