Can You Use an HSA for Prescriptions?

What medications are HSA eligible?

In short, almost all medications and drugs used to treat or prevent a condition are eligible for tax-free payment using your HSA.

Prescription medications

All prescribed drugs are qualified medical expenses. You can use your HSA funds to cover:

• the cost of the prescription itself
• your health insurance plan’s copay or deductible related to the prescription

If you purchase a prescription medication, you can pay for it directly with an HSA debit card or pay out-of-pocket and reimburse yourself later using funds from your account.

Prior to 2020, you needed a doctor’s prescription for OTC medication to be HSA eligible. That rule was permanently changed under the Coronavirus Aid, Relief, and Economic Security (CARES) Act, making it much easier to use your funds.

Now, you can purchase the following types of OTC medications and products with your HSA funds without needing a prescription:

• pain relievers and fever reducers, such as:
  • aspirin
  • ibuprofen
  • acetaminophen
• cold and flu treatments, such as:
  • decongestants
  • cough suppressants
  • lozenges
• allergy and sinus medications, such as:
  • antihistamines
• digestive aids, such as:
  • antacids
  • laxatives
  • anti-diarrheal medications
• menstrual products, such as:
  • tampons
  • pads
  • liners
  • menstrual cups

This permanent change makes your HSA a valuable tool for everyday health needs. You can find a more complete list of eligible expenses in the official IRS Publication 502, which covers qualified medical expenses.

What other items can you use your HSA debit card to purchase?

While the core purpose of an HSA is to pay for medical care, many other items you might not think of are considered qualified medical expenses. These include items and services that help treat, diagnose, mitigate, or prevent disease.

Durable medical equipment (DME) is also covered. This includes supplies such as CPAP machines, wheelchairs, walking canes, and blood sugar monitors.

Can I use my HSA for prescription glasses?

Yes, prescription glasses, contact lenses, and even related supplies are qualified medical expenses. These include:

• eye exams
• prescription eyeglasses and sunglasses
• contact lenses
• contact lens solution and cases
• corrective surgery (like LASIK)

If you have vision insurance, your HSA can be used to pay for any copays, deductibles, or costs that your insurance doesn’t cover.

Can I use my HSA for health insurance premiums after retirement?

Generally, you cannot use HSA funds to pay for regular health insurance premiums while you’re working.

However, once you turn 65, your HSA gains significant flexibility, and there are several exceptions that allow you to use the money for health insurance premiums tax-free:

• Medicare premiums: You can use your HSA to pay for premiums for Medicare Parts A (if applicable), B, and D, as well as Medicare Advantage plans.
• COBRA premiums: You can use your HSA to pay for premiums for healthcare coverage purchased under COBRA continuation coverage.
• Long-term care premiums: You can use your HSA to pay for premiums for a qualified long-term care insurance policy (up to annual limits based on age).

At age 65, your HSA essentially converts into a retirement account. While you must stop contributing to the HSA once you enroll in Medicare, you can withdraw funds for any purpose without the 20% penalty. You’ll just pay income tax on non-medical withdrawals, similar to a traditional IRA.

Can I use my HSA for groceries?

No. General food items are not considered qualified medical expenses.

However, there is an exception for food or beverages bought for the purpose of treating a specific medical condition, such as a diagnosed illness or allergy. In this situation, the following must be true:

• The food is specifically recommended by a medical professional (like a doctor or registered dietitian) to treat a medical condition.
• The food is in addition to what you would normally eat or replaces a regular item to alleviate the condition.
• You must be able to calculate and only claim the difference in cost between the medical food and a non-specialized food product.

For instance, if a doctor recommends special high-protein shakes, you can use your HSA to pay for them, but you’ll need to keep detailed records, including a letter from your doctor or proof of a diagnosis.

Note: Even if you use your HSA debit card, you should always keep your receipts for medical expenses in case you need to prove the expense to the IRS later.

Takeaway

An HSA is a versatile and valuable tool for managing both expected and unexpected healthcare costs, including medications. Your HSA can be used to cover all standard out-of-pocket prescription costs, and it now covers a wide variety of essential OTC medications and products without needing a prescription. Additionally, it offers powerful benefits for vision care and, especially, for healthcare costs and certain insurance premiums in retirement.

Disclaimer: Healthline has made every effort to make certain that all information is factually correct, comprehensive, and up to date. However, this article should not be used as a substitute for the knowledge and expertise of a licensed healthcare professional. You should always consult your doctor or another healthcare professional before taking any medication. The drug information contained herein is subject to change and is not intended to cover all possible uses, directions, precautions, warnings, drug interactions, allergic reactions, or adverse effects. The absence of warnings or other information for a given drug does not indicate that the drug or drug combination is safe, effective, or appropriate for all patients or all specific uses.