How to Know If Something Is HSA Eligible: Purpose Test and Proof

Something is HSA eligible if it meets the IRS definition of “medical care” under Section 213(d) of the tax code: the cost must diagnose, treat, cure, mitigate, or prevent a specific disease or condition, or affect a structure or function of the body. To know if a specific item qualifies, run it through that test, check it against IRS Publication 502, and for anything on the borderline, get a Letter of Medical Necessity from your doctor before you buy.¹ Spend HSA money on something that doesn’t qualify and you’ll owe income tax on the amount plus a 20 percent penalty if you’re under 65.

The Primary Purpose Test

Every eligibility question comes back to one distinction: is the expense driven by a specific medical need, or is it for general health and comfort? A prescription allergy medication clears the bar. A beach vacation your doctor thinks would help you de-stress does not.

When an item serves both a medical and a personal purpose, it qualifies only if the medical reason is the primary driver of the cost. A mattress you bought because it’s comfortable isn’t eligible. The same mattress prescribed by an orthopedist for a documented spinal condition can be, with the right documentation. If you’re uncertain about a purchase, ask yourself which reason you’d have bought it for on its own. That answer usually settles it.

Expenses That Qualify Without Extra Documentation

Most things people think of as “going to the doctor” qualify automatically. Office visits, lab work, surgery, hospital stays, dental cleanings, tooth extractions, eye exams, prescription eyeglasses, and contact lenses are all straightforward.¹ Prescription drugs and insulin qualify regardless of whether the medication is also available over the counter.

Since the CARES Act took effect in 2020, over-the-counter medications like pain relievers, antihistamines, and cold medicine qualify without a prescription. Menstrual care products, including tampons, pads, liners, and cups, also qualify.² That was a permanent change.

Durable medical equipment fits the same pattern: crutches, wheelchairs, blood glucose monitors, and hearing aids all qualify because each directly supports treatment or management of a condition. When you’re unsure whether a product crosses from “personal” to “medical,” look for whether it was designed for a therapeutic purpose rather than general comfort.

Travel to and from medical care counts too. For 2026, the IRS allows 20.5 cents per mile when you drive your own car for medical purposes, plus parking and tolls.³ Buses, taxis, and rideshares to appointments qualify. Lodging away from home for medical care qualifies within reason, but the amount cannot be “lavish or extravagant” and meals are generally not included.

You can spend HSA funds on qualified expenses for your spouse and anyone you claim as a dependent, even if they’re not on your health plan.⁴ You can also cover someone who would have qualified as your dependent except that they filed a joint return or exceeded the income threshold, which matters most for adult children and aging parents you support financially.⁵

Expenses the IRS Excludes

The most common disqualified expenses fall into three categories: cosmetic procedures, general wellness products, and personal hygiene items.

Cosmetic surgery is excluded unless it corrects a deformity from a congenital condition, an accidental injury, or a disfiguring disease.⁶ A facelift to look younger doesn’t qualify. Reconstructive surgery after a car accident does. The test is whether the procedure meaningfully treats a medical condition or only improves appearance.

Vitamins and nutritional supplements are excluded unless a doctor prescribes them to treat a specific diagnosed deficiency. A daily multivitamin taken as a precaution doesn’t count. A humidifier bought for general comfort isn’t eligible, though the same humidifier prescribed by a pulmonologist for a chronic respiratory condition can be with a letter of medical necessity.

Toothpaste, deodorant, shaving cream, and other daily hygiene products never qualify because they serve a personal function. Gym memberships remain excluded in 2026 unless prescribed by a physician to treat a diagnosed condition like obesity or cardiac disease, and even then, documentation is everything and IRS scrutiny is high. A proposal during the One, Big, Beautiful Bill Act to make gym memberships broadly eligible up to $500 per year was considered but did not make it into the final law.

Borderline Items and the Letter of Medical Necessity

For items that sit between medical and personal, a Letter of Medical Necessity (LMN) from your doctor is what moves them into the eligible column. This applies to orthopedic shoes, ergonomic chairs prescribed for a back condition, air purifiers for documented allergies, therapeutic mattresses, and similar purchases.

The letter must include a specific diagnosis, the recommended product or treatment, how often you’ll use it, and how long you need it. Generic notes like “patient would benefit from a better mattress” won’t hold up. The LMN has to tie the expense directly to the treatment of a diagnosed medical condition. Without it, your HSA administrator will reject the claim, and if you paid with your HSA debit card, the IRS will treat the distribution as non-qualified.

Get the letter before you buy. Obtaining it after the fact is possible but creates a weaker paper trail. Keep the original with your tax records for at least three years after filing the return that covers the year of the purchase.¹

Insurance Premiums Are Usually Not Eligible

As a general rule, you cannot use HSA funds to pay health insurance premiums. Four specific exceptions are written into the statute:⁴

COBRA continuation coverage after a qualifying event.
Health plan premiums while you’re receiving federal or state unemployment benefits.
Qualified long-term care insurance premiums, up to age-based annual caps.
Medicare premiums once you’re 65 or older, including Part A, Part B, Medicare Advantage, and the employee share of employer-sponsored retiree coverage. Medigap supplemental policies do not qualify.⁵

The Medigap exclusion catches many retirees off guard. If you’re over 65 and paying for both a Medicare supplement and Medicare Part B, only the Part B premium comes out of your HSA tax-free.

The long-term care premium caps for 2026 are age-based:

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

Any premium above the cap isn’t a qualified expense even though the policy itself is.

How to Verify a Specific Expense Before You Buy

The most reliable pre-purchase check is IRS Publication 502, which lists specific expenses alphabetically and notes whether each one qualifies. It’s updated annually and free on the IRS website.¹ If your item is listed as qualifying, you’re on solid ground.

At the store level, many retailers use a system built on the SIGIS (Special Interest Group for IIAS Standards) Eligible Product List. When you swipe your HSA debit card, the payment terminal checks the item’s product code against this list and approves or declines the transaction in real time. Retailers that support the system often mark qualifying items on shelves or product pages, and online marketplaces frequently offer an “HSA/FSA eligible” filter.

Check your receipt after checkout. Many retailers print a code like “H” or “F” next to items the system flagged as health-related. If an item you believe is eligible doesn’t get flagged, pay out of pocket and submit a reimbursement claim to your HSA administrator later with the receipt and any supporting documentation. There’s no deadline on reimbursement: as long as the expense was incurred after you opened the HSA and you have the receipt, you can pay yourself back years later.⁵

What Happens If You Get It Wrong

Any HSA distribution not used for a qualified medical expense is added to your gross income for the year and hit with an additional 20 percent tax.⁴ On a $1,000 non-qualified withdrawal, that’s $200 in penalty alone before your regular income tax. The penalty applies whether or not the mistake was intentional.

Three situations waive the 20 percent penalty: reaching age 65, disability, or distributions made after the account holder’s death. In the first two cases you still owe ordinary income tax on the non-medical amount; the penalty simply drops away.

If you used your HSA by mistake based on a genuine, reasonable misunderstanding of the facts, you can repay the funds by April 15 of the year after you discovered (or should have discovered) the error, and the distribution won’t be treated as taxable income.⁷ Your HSA custodian is not required to accept the returned funds, though. If the custodian won’t take it back, the distribution stays taxable and the penalty still applies if you’re under 65. Report non-qualified distributions on Form 8889.⁸

Records That Prove Eligibility Later

The IRS doesn’t ask for receipts at filing time. It asks for them if you’re audited. For each HSA expense, keep the receipt showing the provider or retailer, the date, the amount, and a description of the service or product. If you have a Letter of Medical Necessity, store it with the matching receipt.

Hold these records at least three years from the date you file the return covering the expense. If you’re reimbursing yourself years after the fact, the clock doesn’t start until you file the return that includes the reimbursement. Digital records are fine as long as you can produce a legible copy on demand, the files are organized so specific documents can be located, and the system protects against unauthorized changes.

Photograph or scan medical receipts the day you get them. Paper receipts from pharmacies and medical offices fade quickly, and a blank thermal receipt won’t help you in an audit three years later.

1
Internal Revenue Service. Publication 502 (2025), Medical and Dental Expenses
2
Internal Revenue Service. IRS Outlines Changes to Health Care Spending Available Under CARES Act
3
Internal Revenue Service. 2026 Standard Mileage Rates
4
Office of the Law Revision Counsel. 26 U.S.C. 223 – Health Savings Accounts
5
Internal Revenue Service. Publication 969, Health Savings Accounts and Other Tax-Favored Health Plans
6
Office of the Law Revision Counsel. 26 U.S.C. 213 – Medical, Dental, Etc., Expenses
7
Internal Revenue Service. IRS Notice 2004-50 – Health Savings Accounts
8
Internal Revenue Service. 2025 Instructions for Form 8889 – Health Savings Accounts (HSAs)