Health Savings Accounts help taxpayers minimize their taxes and save for medical expenses. It’s an interest-bearing account that allows you to cover your qualified medical expenses without paying taxes on the income.
However, if you spend the money on ineligible items, you must pay taxes and penalties on the funds. The good news is that you can cover many eligible expenses in your Health Savings Account.
Who is Eligible for an HSA?
Because of its tax advantages, only certain people are eligible for a Health Savings account. To be eligible, you must:
Have a high-deductible health plan with a deductible of $1,500 for individuals or $3,000 for families
Not have any other health plans, including Medicare
Not be a dependent on anyone’s tax return
How can you use Health Savings Account Funds?
Most people know the basics of how you can use HSA funds, such as:
To meet deductibles
Cover co-payments
Pay for dental or vision services
Pay for prescriptions
However, there are many other less common ways you can use HSA funds, including the following:
Sunscreen and lip balm – Your HSA funds can pay for sunscreen and sunblock, including those made for kids, just for your face, and mixed with insect repellent. If you buy lip balm using HSA funds, it must have at least 15 SPF to qualify.
Prescription glasses – If you have a prescription for glasses from an eye doctor, you can use your HSA funds to cover the cost of the frames and lenses or contact lenses.
First-aid kits – You can use your Health Savings Account funds to stock up on your first aid kit. You can buy a pre-made first-aid kit or make your own.
Prenatal vitamins – Most ‘regular’ vitamins aren’t HSA-eligible, but prenatal vitamins are eligible because they prevent birth defects and help with proper development.
Aloe vera – If you need aloe vera for sunburn or regular burn, it may qualify under your Health Savings Account if your doctor prescribes it. You can’t get it covered if you don’t have a prescription.
Athletic wraps – Most athletic support, such as wraps, braces, and tape, fall under qualified HSA purchases. Therefore, you don’t need a prescription to have them covered.
Female hygiene products – The CARES Act recently made all female hygiene products, including pads and tampons, eligible for HSA funds.
Contraceptives – Many condoms and contraceptives are eligible for your HSA funds.
Fitness trackers – If your doctor writes you a prescription for a fitness tracking device to ensure you move enough, you can get it covered under your HSA.
Final Thoughts
It’s important to talk to your HSA provider to ensure the products you want to buy fall under your HSA rules. If you buy something that doesn’t qualify, you’ll pay a penalty and taxes on the funds.
However, many things fall under the Health Savings Account rules that many people don’t realize. If you have questions about your HSA or how to set one up, contact the professionals at Henson & Murtha today. For more HSA content, check out the following blog over at Murtha and Murtha CPAs: Can a Health Savings Account Help me Reduce My Tax Liability