HSA Publication 502: Eligible Expenses, Limits, and Age 65 Rules

Under IRS Publication 502, HSA eligible expenses are the medical and dental costs that treat, diagnose, or prevent a specific disease or that affect a structure or function of the body, and your HSA can pay for them tax-free.¹ Spend HSA money on anything else before age 65 and you owe income tax on the withdrawal plus a 20% penalty.²

Why Publication 502 Sets the Rules for Your HSA

Publication 502 was written for the medical expense itemized deduction on Schedule A, not for HSAs. But the HSA statute defines “qualified medical expenses” by pointing to the same definition of “medical care” under Internal Revenue Code Section 213(d).² Publication 969, which covers HSAs directly, confirms the cross-reference and sends readers to Publication 502 for the full list.³ So if Publication 502 says an expense counts, your HSA can pay for it tax-free, with a short list of HSA-specific exceptions around insurance premiums.

The expense must address a specific medical condition. Costs that are simply good for your health, like a multivitamin or a gym membership, don’t qualify unless a doctor prescribes them to treat a diagnosed condition.⁴ One timing detail also matters: the expense has to be incurred after your HSA was established. You cannot open an account today and reimburse yourself for last year’s surgery. There is no deadline in the other direction, though. If you pay out of pocket for a qualifying expense now, you can reimburse yourself from your HSA years later, provided you keep the receipt and the HSA existed when you paid the bill.

Common Expenses That Qualify

Most routine healthcare costs pass the Publication 502 test without any special conditions:

Doctor and specialist visits, including fees for physicians, surgeons, dentists, and other licensed practitioners
Hospital care, inpatient services, lab work, and diagnostic imaging
Prescription drugs
Dental care, from cleanings and fillings to braces and dentures
Vision care, including eye exams, prescription glasses, and contact lenses
Over-the-counter medicines such as pain relievers, allergy medication, and cold medicine
Menstrual care products, including tampons, pads, and cups

Over-the-counter medicines and menstrual products became permanently qualified HSA expenses under the CARES Act in 2020. Before that, OTC drugs needed a prescription to qualify.²

Expenses That Qualify Only With Conditions

Several categories qualify only when specific requirements are met. These are the areas where mistakes happen most often.

Transportation to Medical Care

Getting to and from care counts, but only the travel itself. You can use HSA funds for ambulance services, bus fare, parking at a hospital, or mileage driven to an appointment. The 2026 IRS medical mileage rate is 20.5 cents per mile.⁵

Lodging While Traveling for Care

Lodging during a medical trip qualifies up to $50 per person per night, or up to $100 combined when a parent travels with a sick child. The rules are strict: the care must be provided at a licensed hospital or equivalent facility, the lodging cannot be lavish, and the trip cannot involve any significant element of vacation or recreation. Meals are never included.⁶

Home Modifications

Capital improvements to your home for a medical reason, such as a wheelchair ramp or widened doorways, can qualify. Only the portion exceeding any increase in your home’s value counts. Spend $10,000 on a ramp that raises your property value by $4,000, and $6,000 qualifies as a medical expense.⁶

Service Animals

Buying, training, and maintaining a certified service animal qualifies, including food, grooming, and veterinary care. The animal must be a certified service animal, such as a guide dog, that assists with a physical disability or sensory impairment. Emotional support animals and therapy pets do not qualify.

Insurance Premiums: Mostly Off-Limits

This is where HSA rules diverge sharply from what Publication 502 would otherwise allow. The HSA statute specifically prohibits paying most health insurance premiums with HSA funds.² The short list of premium types you can pay:

COBRA continuation coverage
Health plan premiums during any period you are collecting unemployment compensation
Qualified long-term care insurance, subject to age-based caps (for 2026: $500 at age 40 or under, $930 for ages 41–50, $1,860 for ages 51–60, $4,960 for ages 61–70, and $6,200 for age 71 and older)
Medicare Parts A, B, C, and D premiums after age 65, but not Medigap policies
Direct primary care arrangements

Regular premiums for your HDHP or any other medical plan do not qualify. Neither do standalone dental or vision insurance premiums. This is one of the most common HSA mistakes.⁷

What Never Qualifies

The IRS draws clear lines around several categories:

Cosmetic procedures such as face lifts, hair transplants, liposuction, and teeth whitening. The only exceptions correct a deformity from a congenital abnormality, an accident or trauma, or a disfiguring disease.⁶
General health and wellness spending: gym memberships, health club dues, and nutritional supplements, unless prescribed to treat a specific diagnosed condition
Any procedure or substance that is illegal under federal law
Personal items like maternity clothes, toiletries, and funeral expenses

The cosmetic exception is narrower than most people expect. Breast reconstruction after a mastectomy qualifies because it corrects a deformity from a disfiguring disease. A nose job to look better does not.⁶

Spending on a Spouse or Dependent

Your HSA can cover qualified medical expenses for your spouse or any tax dependent, not just yourself.² They do not need to be covered by your HDHP. If your spouse has their own employer plan, your HSA can still pay their copays and prescriptions tax-free, as long as the expenses meet the Publication 502 standards.

Form 8889 also extends this treatment to individuals who would qualify as your dependent except that they filed a joint return, had gross income above the dependent threshold, or you yourself are claimed as a dependent on someone else’s return.⁸

How the Rules Change at 65

Once you turn 65, the 20% penalty on non-medical withdrawals disappears. You still owe income tax on any distribution not used for qualified medical expenses, but the penalty is gone.² Non-medical HSA withdrawals then work like traditional IRA distributions: taxable but not penalized.

Turning 65 also unlocks Medicare premiums as a qualified expense. Parts A, B, C, and D premiums all count, making those withdrawals fully tax-free. Medigap policies remain excluded.² Note that once you enroll in Medicare, you can no longer contribute new money to your HSA, though you can still spend what is already there.

Records You Need to Keep

Your HSA custodian does not verify whether your withdrawals went to qualified expenses. That responsibility sits with you. The IRS requires records showing three things: the distribution paid for a qualified medical expense, that expense was not reimbursed by insurance or another source, and you did not also claim it as an itemized deduction.³

You do not send these records with your return, but you need them if the IRS asks. Save receipts, explanation-of-benefits statements, and any letter of medical necessity for conditional expenses. If you are paying out of pocket now and reimbursing yourself from the HSA later, keep those receipts indefinitely. There is no statute of limitations on when you can reimburse, but the IRS can still ask you to prove the expense was real.

What a Wrong Withdrawal Costs

Withdraw HSA money for something that is not a qualified medical expense while you are under 65 and two things happen. The full amount gets added to your taxable income for the year, and the IRS tacks on an additional tax equal to 20% of the withdrawal.² On a $2,000 non-qualified withdrawal, someone in the 22% bracket owes $440 in income tax plus a $400 penalty, or $840 total. That is 42% of the withdrawal gone to buying the wrong thing.

After 65, only the income tax applies. If the account holder becomes disabled or dies, neither the penalty nor the income tax inclusion applies to distributions used by the beneficiary.⁸

1
Office of the Law Revision Counsel. 26 USC 213 – Medical, Dental, Etc., Expenses
2
Office of the Law Revision Counsel. 26 USC 223 – Health Savings Accounts
3
Internal Revenue Service. Publication 969 – Health Savings Accounts and Other Tax-Favored Health Plans
4
Internal Revenue Service. Publication 502 – Medical and Dental Expenses
5
Internal Revenue Service. IRS Sets 2026 Business Standard Mileage Rate at 72.5 Cents Per Mile, Up 2.5 Cents
6
Internal Revenue Service. Publication 502 – Medical and Dental Expenses
7
HealthCare.gov. How Health Savings Account-Eligible Plans Work
8
Internal Revenue Service. Instructions for Form 8889