As someone who’s navigated the maze of healthcare costs, I know how overwhelming it can be to manage medical expenses while trying to save money. That’s where a Health Savings Account (HSA) comes in, a powerful tool that’s helped me cover healthcare costs tax-free while planning for future expenses.
If you’re wondering, “What can you use a Health Savings Account for?” you’re in the right place.
What Is a Health Savings Account (HSA)?
A Health Savings Account is a tax-advantaged savings account designed for individuals enrolled in a High-Deductible Health Plan (HDHP).
I use my Health Savings Account (HSA) to set aside money pre-tax to pay for qualified medical expenses, and the best part? The funds roll over year after year, and they’re portable, meaning you keep them even if you switch jobs or health plans.
According to HealthEquity, an HSA paired with an HDHP allows you to make tax-free contributions to cover eligible healthcare costs, offering a triple tax advantage: tax-deductible contributions, tax-free growth, and tax-free withdrawals for qualified expenses.
You might be wondering why this matters. Well, by using an HSA, you can save approximately 30% on eligible expenses because contributions are exempt from federal, state, and FICA payroll taxes. For example, a $1,000 medical bill could effectively cost you about $700 after tax savings.
Eligible Medical Expenses: What Can You Use Your HSA For?
When I first opened my HSA, I was surprised by how many expenses qualified. The IRS defines qualified medical expenses as costs for the diagnosis, treatment, or prevention of disease, including payments for medical services, prescription drugs, and certain over-the-counter items. Here’s a detailed look at what you can use your HSA for:
1. Doctor Visits and Medical Services
I’ve used my HSA to cover co-pays for doctor visits, specialist consultations, and even mental health therapy sessions. You can use your HSA for:
- Primary care and specialist visits (e.g., dermatology, cardiology).
- Preventive care, like annual physicals or vaccinations.
- Mental health services, including therapy and counseling.
- Hospital stays and surgical procedures.
For example, if you visit an urgent care clinic for a sudden illness, your HSA can cover the bill, saving you out-of-pocket costs.
2. Prescription Medications and Over-the-Counter Items
One of the most practical uses of my HSA is paying for prescriptions. Whether it’s medication for a chronic condition or a short-term antibiotic, your HSA has you covered.
Since 2020, the CARES Act expanded HSA eligibility to include over-the-counter (OTC) medications without a prescription, such as:
- Pain relievers (e.g., ibuprofen, aspirin).
- Cold and flu remedies.
- Allergy medications.
- First-aid supplies like bandages or antiseptic creams.
You can also use your HSA for prescription contact lenses, glasses, and even menstrual care products like tampons and pads.
3. Dental and Vision Care
I was thrilled to learn that my HSA could cover dental and vision expenses, which often aren’t fully covered by traditional insurance. You can use your HSA for:
- Dental cleanings, fillings, and orthodontics (e.g., braces).
- Eye exams, prescription glasses, and contact lenses.
- LASIK or other vision correction surgeries.
For instance, when I needed new glasses, I used my HSA to cover the cost, making it a seamless and tax-free transaction.
4. Medical Equipment and Supplies
If you need durable medical equipment, your HSA can help. I’ve used mine for items like:
- Blood pressure monitors.
- CPAP machines for sleep apnea.
- Mobility aids like crutches or wheelchairs.
- Hearing aids and batteries.
These purchases can be costly, but using your HSA makes them more affordable by leveraging pre-tax dollars.
5. Other Qualified Expenses
Beyond the basics, HSAs cover a surprising range of expenses. For example, you can use your HSA for:
- Acupuncture and chiropractic care.
- Fertility treatments, like in-vitro fertilization.
- Smoking cessation programs and nicotine patches.
- Weight-loss programs (if prescribed by a doctor for a specific medical condition).
I recently learned that some fitness expenses, like gym memberships or fitness equipment, may qualify if prescribed for a medical condition, though this varies by plan and requires documentation. Always check with your HSA provider to confirm eligibility.
Non-Medical Expenses: What You Can’t Use Your HSA For
While HSAs are versatile, there are limits. I’ve learned the hard way that using HSA funds for non-qualified expenses can lead to a 20% penalty plus taxes if you’re under 65. Here are some things you cannot use your HSA for:
- Cosmetic procedures (e.g., Botox, elective plastic surgery).
- General health supplements or vitamins (unless prescribed).
- Personal care items like toothpaste or shampoo.
- Insurance premiums (with exceptions, like COBRA or Medicare Part B for those 65+).
To avoid penalties, I always double check the IRS guidelines or consult my HSA provider before making a purchase. You should do the same to stay on the safe side.
Creative Ways to Maximize Your HSA
Beyond covering immediate medical expenses, I’ve discovered ways to make my HSA work harder for me. Here are some strategies you can adopt:
1. Save for Future Medical Expenses
Unlike Flexible Spending Accounts (FSAs), HSA funds don’t expire. I treat my HSA like a long-term savings account, letting the balance grow tax-free. You can save for future costs, like surgeries or retirement healthcare expenses.
After age 65, you can even withdraw funds for non-medical expenses without penalty (though you’ll owe income tax).
2. Invest Your HSA Funds
Many HSA providers, like Optum Bank, allow you to invest your HSA funds in mutual funds or other investment options. I started investing a portion of my HSA balance, and it’s grown significantly over time. If you have extra funds, consider investing to build wealth for future healthcare needs.
3. Pay Out-of-Pocket and Save Receipts
One tip I learned from financial experts on X is to pay for medical expenses out-of-pocket when possible and save the receipts. This allows your HSA to grow tax-free, and you can reimburse yourself later, even years down the line. It’s like giving your HSA a chance to compound, similar to a retirement account.
Why You Should Consider an HSA
From my experience, an HSA is one of the most tax-advantaged accounts available. Here’s why you should consider one:
- Triple Tax Advantage: Contributions are tax-deductible, earnings grow tax-free, and withdrawals for qualified expenses are tax-free.
- Portability: Your HSA stays with you if you change jobs or health plans.
- Flexibility: You can spend, save, or invest your HSA funds based on your needs.
For 2025, the HSA contribution limits are $4,300 for individuals and $8,550 for families, with an additional $1,000 catch-up contribution for those 55 and older. Some proposals suggest doubling these limits for lower-income individuals, so keep an eye on updates.
