HSA Qualified Medical Expenses: IRS Test, Premiums, and Age 65

HSA qualified medical expenses are the costs the IRS lets you pay for tax-free from a Health Savings Account: care that diagnoses, treats, or prevents a specific physical or mental health condition, as defined by Section 213(d) of the Internal Revenue Code.¹ Spend on something outside that definition and, if you’re under 65, you’ll owe income tax on the withdrawal plus a 20% penalty.² The categories below cover what qualifies, what doesn’t, and the handful of rules that trip people up most.

The Test the IRS Applies

Every eligibility question comes back to Section 213(d), which defines medical care as amounts paid to diagnose, treat, or prevent disease, or to affect any structure or function of the body.¹ Section 223, which governs HSAs, points straight back to that definition.³ The practical rule: if a treatment addresses a specific medical need rather than general well-being or appearance, it almost certainly qualifies. IRS Publication 502 spells out hundreds of specific items, and Publication 969 covers the account rules.

What Qualifies

Medical Care and Prescriptions

Doctor visits, hospital stays, emergency room treatment, lab work, imaging, and surgery all qualify when they address a health issue. So do physical therapy, mental health counseling, and substance abuse treatment. Prescription medications and insulin are named directly in the statute.¹ Categories people often miss but that also qualify: hearing aids and batteries, LASIK and other corrective eye surgery, and fertility treatment including in-vitro fertilization.

Dental and Vision

Dental and vision care qualify even though they usually sit under separate insurance. Cleanings, fluoride, fillings, extractions, braces, dentures, eye exams, prescription glasses, and contact lenses are all eligible.⁴ Cosmetic work is the exception: teeth whitening is explicitly excluded, and purely cosmetic veneers follow the same logic. A crown for structural reasons qualifies; veneers for appearance don’t.

Over-the-Counter Products and Menstrual Care

The CARES Act made over-the-counter medications permanently HSA-eligible without a prescription. Pain relievers, allergy medications, cold medicine, and antacids all count.⁵ Bandages, thermometers, and joint braces were already eligible. Menstrual care products were added as their own qualified category under Section 223(d): tampons, pads, liners, cups, and sponges are reimbursable.³ Sunscreen at SPF 15 or higher qualifies as preventive care; a general moisturizer that happens to include SPF likely doesn’t.

What Doesn’t Qualify

The general rule: anything primarily for appearance, personal comfort, or vague “wellness” without a diagnosed condition is out. Getting this wrong costs you income tax plus the 20% penalty if you’re under 65.

Cosmetic surgery and procedures such as face-lifts, liposuction, and teeth whitening.⁴
Gym memberships, personal trainers, and exercise equipment, unless a doctor prescribes them for a diagnosed condition.
Toiletries and personal care items like toothpaste, deodorant, shampoo, and general skincare.
Vitamins and nutritional supplements without a doctor’s recommendation tied to a specific condition.
Most health insurance premiums (see the exceptions below).

Insurance Premiums: The Rule and the Four Exceptions

You generally cannot use HSA funds to pay health insurance premiums. The statute prohibits it.³ Your monthly HDHP premium, a marketplace plan premium, and Medigap supplemental policies are all off-limits. Four exceptions apply:

COBRA continuation coverage after leaving a job.
Any health insurance premiums paid while collecting unemployment compensation.
Medicare premiums once you turn 65, including Part A, Part B, Part C (Medicare Advantage), and Part D. Medigap still doesn’t qualify.
Qualified long-term care insurance premiums, subject to age-based annual limits.²

Dual-Purpose Items and the Letter of Medical Necessity

Some expenses could be medical or personal depending on why you use them. For these, your HSA administrator will want a Letter of Medical Necessity from a licensed provider before approving the distribution. Common examples: weight-loss programs prescribed for obesity or heart disease, massage therapy for a specific ailment, and compression socks.

The letter should include your name, a specific diagnosis, the recommended treatment, and how long the treatment should last, and be signed by a licensed practitioner. The purchase or service date has to fall after the letter is written. Most administrators treat an undated letter as valid for 12 months. A gym membership illustrates the mechanism: never eligible on its own, but a structured exercise program prescribed for a diagnosed condition becomes reimbursable once the letter is on file.

Medical Travel and Lodging

When you travel for medical care, the trip itself can be eligible. For 2026, the IRS allows 20.5 cents per mile for medical travel by car, plus parking and tolls.⁶ Bus fare, train tickets, and ambulance costs also qualify.

Lodging is eligible up to $50 per night per person when all four conditions are met: the lodging is primarily for medical care, the care is at a licensed hospital or equivalent facility, the lodging isn’t lavish, and the trip has no significant element of personal vacation.⁴ A parent traveling with a sick child gets $100 per night for both. Meals during travel don’t qualify.

Home Modifications for Medical Needs

Medically necessary changes to your home can be HSA expenses, but the amount depends on what the modification does to your property value. Changes that don’t add value are fully eligible. Publication 502 lists entrance ramps, widened doorways, bathroom grab bars, stairway modifications, and accessible kitchen cabinets among common examples.⁴

If a modification does raise your home’s value, the eligible amount is reduced by that increase. Install an $8,000 elevator that raises your home’s value by $4,400 and only $3,600 counts. If the value bump equals or exceeds the cost, the installation isn’t eligible at all, though ongoing operating and maintenance costs remain eligible while the medical need exists.⁴ An appraisal before and after the work is the only way to establish the numbers.

Spouse and Dependent Expenses

You can use your HSA for qualified medical expenses of your spouse or any tax dependent, even if they aren’t covered by your HDHP.³ The person must meet the IRS definition of a dependent under Section 152 at the time the expense is incurred, meaning a qualifying child or a qualifying relative who relies on you for more than half of their support.⁷

The Adult Child Trap

The Affordable Care Act lets children stay on a parent’s health plan until age 26, but that has nothing to do with HSA eligibility. Two traps follow. First, you can only use your HSA for an adult child’s expenses if the child qualifies as your tax dependent. Most children over 19 who aren’t full-time students and who earn enough to support themselves won’t meet the dependency tests, even while still on your insurance.

Second, an adult child who can be claimed as a dependent on someone else’s return is ineligible to open or contribute to their own HSA, even if covered under an HDHP.³ The word “can” is what matters. It doesn’t hinge on whether you actually claim them. A child who provides more than half of their own support fails the dependency test and becomes eligible for their own HSA while potentially staying on the parent’s HDHP.

What Changes at Age 65

Turning 65 changes two things. The 20% penalty for non-medical withdrawals disappears; you’ll still owe ordinary income tax on distributions that aren’t for qualified medical expenses, but the surcharge is gone.² For non-medical spending the account starts behaving like a traditional IRA, while medical distributions remain fully tax-free.

Medicare premiums also become eligible for tax-free distributions at 65 — Parts A, B, C, and D — with Medigap the lone exception. One timing note: once you enroll in Medicare you can no longer contribute to your HSA, but you can keep spending your existing balance on qualified expenses for life.²

Records and the No-Deadline Reimbursement Rule

The IRS doesn’t ask for receipts when you take a distribution, but in an audit the burden is entirely on you. Keep itemized receipts showing date of service, provider, description, and amount paid out of pocket. A credit card statement alone won’t do because it doesn’t describe the service. Explanations of Benefits from your insurer back up what insurance covered and what you owed. For any dual-purpose item, keep the Letter of Medical Necessity with the receipt.

Federal law sets no deadline for reimbursing yourself. You can pay a qualified medical expense out of pocket today and take the money out of the HSA years or decades later, as long as the account was open when the expense was incurred, the expense wasn’t reimbursed from another source, and you didn’t claim it as an itemized deduction. That’s why receipts need to survive: if you plan to reimburse yourself in 2036 for a 2026 doctor visit, you’ll need the documentation to make it that far. The IRS baseline for keeping tax records is three years from filing, but for HSA receipts, indefinite is the practical rule.⁸

1
Office of the Law Revision Counsel. 26 USC 213 – Medical, Dental, Etc., Expenses
2
Internal Revenue Service. Publication 969, Health Savings Accounts and Other Tax-Favored Health Plans
3
Office of the Law Revision Counsel. 26 USC 223 – Health Savings Accounts
4
Internal Revenue Service. Publication 502 – Medical and Dental Expenses
5
Internal Revenue Service. IRS Outlines Changes to Health Care Spending Available Under CARES Act
6
Internal Revenue Service. IRS Sets 2026 Business Standard Mileage Rate at 72.5 Cents Per Mile, Up 2.5 Cents
7
Office of the Law Revision Counsel. 26 USC 152 – Dependent Defined
8
Internal Revenue Service. How Long Should I Keep Records