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Qualified Expenses

Qualified expenses are defined under Section 213(d) of the IRS Code.  Medical care expense is defined as amounts paid for the diagnosis, cure, treatment or prevention of disease, and for treatments affecting any part or function of the body. Medical care expenses must be primarily to alleviate or prevent a physical or mental defect or illness.

Below are examples of both qualified and non-qualified medical expenses. For more detailed information, refer to IRS Publication 502 titled, "Medical and Dental Expenses".  This publication is available at:  www.irs.gov/pub/irs-pdf/p502.pdf

Examples of Qualified Medical Expenses

• Acupuncture
• Alcoholism treatment
• Ambulance
• Artificial limbs or prostheses
• Artificial teeth
• Birth control pills (by prescription)
• Braces
• Breast reconstruction surgery
• Car - special hand controls or equipment to accommodate a disabled person
• Chiropractor
• Christian Science practitioner
• Contact lenses and cleaning solutions
• Crutches
• Dental treatment
• Dentures
• Dermatologist
• Diagnostic devices (blood sugar test kit)
• Drug addiction treatment
• Eyeglasses
• Fertility enhancement
• Guide dog or assistance animal
• Hearing aids and batteries
• Home care
• Home improvements to accommodate a disabled person
• Hospital services
• Lab fees
• Laser eye surgery
• Lead paint removal
• Lodging (away from home for prescribed outpatient care)
• Long-term care premiums (certain limits apply)
• Long-term care services
• Nonprescription medications
• Nursing home
• Nursing services (including board and meals)
• Ophthalmologist
• Optician
• Optometrist
• Organ transplant (including donor's expenses)
• Osteopath
• Oxygen and oxygen equipment
• Physician services
• Podiatrist
• Prescription medications
• Psychiatric care
• Psychiatrist
• Psychologist
• Special home for the mentally retarded
• Special school costs for the handicapped
• Sterilization
• Surgery
• Stop-smoking programs (physician prescribed)
• Telephone or TV equipment to assist the hearing impaired
• Therapy
• Transportation (primarily for and essential to medical care)
• Vasectomy
• Weight loss programs to treat an existing disease
• Wheelchair
• X-rays

Examples of Non-Qualified Medical Expenses

• Athletic or health club membership
• Automobile insurance premium allocable to medical coverage
• Babysitting and childcare for a healthy baby
• Bottled water
• Cosmetic surgery and procedures (unless for deformity)
• Cosmetics, hygiene products and similar items
• Diaper service
• Domestic help
• Electrolysis or hair removal
• Funeral, cremation or burial expenses
• Hair transplant
• Illegal operations and treatments
• Maternity clothes
• Nutritional supplements
• Premiums for life insurance, income protection, disability, loss of limbs, sight or similar benefits

Health Insurance may not be purchased with HSA Funds. There are 4 situations which are exceptions whereby HSA funds can be used to pay for:

1. A health plan during any period of continuation coverage required under any federal law.
2. A qualified long-term insurance contract.
3. A health plan during a period in which the individual is receiving unemployment compensation under federal or state law.
4. For individuals over age 65, premiums for Medicare Part A or B, a Medicare HMO and/or the employee share of premiums for the employer-sponsored health insurance, including premiums for employer-sponsored retiree health insurance.