A health savings account (HSA) can be used to pay for a wide range of medical, dental, and vision expenses, plus over-the-counter medications, menstrual products, and even some insurance premiums. The money comes out tax-free as long as you spend it on qualified medical expenses for yourself, your spouse, or your dependents. Here’s what counts and what doesn’t.
How the Tax Advantage Works
An HSA offers a triple tax benefit that no other account matches. Your contributions are tax-free (and if made through payroll deductions, they also skip Social Security and Medicare taxes). Any money you invest inside the account grows tax-free. And withdrawals for qualified medical expenses aren’t taxed either. This combination makes the HSA one of the most powerful savings tools available, whether you use it now for medical costs or let it grow for decades.
To open and contribute to an HSA, you need to be enrolled in a high-deductible health plan (HDHP). For 2025, that means a plan with a deductible of at least $1,650 for individual coverage or $3,300 for family coverage. For 2026, contribution limits are $4,400 for self-only coverage and $8,750 for family coverage. If you’re 55 or older, you can add an extra $1,000 per year.
Medical Expenses That Qualify
The IRS defines qualified medical expenses broadly: anything that diagnoses, cures, treats, or prevents disease, or that affects any structure or function of the body. In practical terms, this covers most of what you’d encounter at a doctor’s office, hospital, or pharmacy.
Common qualifying expenses include:
- Doctor and specialist visits: fees for physicians, surgeons, psychiatrists, and other practitioners
- Hospital services: inpatient care, surgery, lab work
- Prescription medications and insulin
- Mental health care: therapy, psychiatric treatment, substance abuse programs
- Medical equipment: crutches, wheelchairs, hearing aids, blood sugar test kits, oxygen equipment
- Fertility treatments
- Acupuncture
- Breast pumps and lactation supplies
- Guide dogs and service animals
- Special education for learning disabilities
You can also use HSA funds for medical transportation, including ambulance fees, bus or train fare to appointments, and car mileage at the IRS standard medical rate. Even parking at a hospital counts.
Over-the-Counter Items
Since the CARES Act took effect in 2020, you no longer need a prescription to buy over-the-counter medications with HSA funds. This is a permanent change, and it covers a long list of everyday products: cold and flu medicine, antihistamines, antacids, pain relievers like ibuprofen and acetaminophen, anti-inflammatory creams, and allergy medications.
Menstrual care products, including tampons, pads, and cups, also became permanently eligible under the same law. Bandages, first aid supplies, and sunscreen with SPF 15 or higher qualify as well.
What still doesn’t qualify: general wellness items like vitamins, supplements, and gym memberships, unless a doctor has prescribed them to treat a specific medical condition. Cosmetic procedures that aren’t medically necessary are also excluded.
Dental Expenses
HSA funds cover a wide range of dental work, from routine care to major procedures. Eligible expenses include cleanings, X-rays, fillings, crowns, bridges, dental implants, extractions, oral surgery, dentures, dental sealants, and orthodontia (braces). Occlusal guards for teeth grinding also qualify. Basically, if your dentist is treating or preventing a dental condition, you can pay with your HSA.
Teeth whitening is one notable exception. The IRS considers it cosmetic, so it’s not eligible.
Vision Expenses
Eye exams, prescription glasses, prescription sunglasses, reading glasses, and contact lenses are all HSA-eligible. Contact lens cleaning solution counts too. LASIK and other laser vision correction surgeries qualify, making HSA funds a practical way to cover a procedure that most insurance plans don’t include.
Home Modifications for Medical Needs
If you or a family member has a disability or medical condition that requires changes to your home, HSA funds can cover those costs. Qualifying modifications include installing wheelchair ramps, widening doorways, adding grab bars, lowering kitchen cabinets, and modifying bathrooms for accessibility. The expense must be primarily for medical care rather than increasing your home’s value. If a modification does raise your property value, only the portion of the cost exceeding the increase in value qualifies.
Insurance Premiums (With Restrictions)
Most of the time, you cannot use HSA money to pay regular health insurance premiums. But there are important exceptions. You can use HSA funds tax-free to pay for COBRA continuation coverage if you’ve lost your job, health insurance premiums while you’re receiving unemployment benefits, Medicare premiums (Parts A, B, and D) once you’re enrolled, and qualified long-term care insurance premiums up to age-based annual limits.
This makes the HSA especially valuable as you approach retirement. Once you’re on Medicare, your HSA becomes a tax-free pool for premiums, copays, deductibles, and coinsurance. You just can’t make new contributions once Medicare enrollment begins.
Spending on Spouse and Dependents
Your HSA funds can pay for qualified medical expenses for your spouse and any tax dependents, even if they aren’t covered by your high-deductible health plan. So if your spouse has a different insurance plan or your child is on a separate policy, you can still use your HSA to cover their prescriptions, dental work, glasses, or any other eligible expense. The account belongs to you, but the spending isn’t limited to your own care.
Using Your HSA After Age 65
Once you turn 65, your HSA becomes even more flexible. You can still withdraw funds tax-free for any qualified medical expense, including Medicare premiums and out-of-pocket costs. But here’s the key change: if you withdraw money for something that isn’t a medical expense, you’ll pay income tax on the amount, but you won’t face the 20% penalty that applies before age 65. This means your HSA essentially functions like a traditional retirement account for non-medical spending, while still offering tax-free withdrawals for healthcare costs.
For people who can afford to pay medical bills out of pocket during their working years and let their HSA grow, this creates a powerful retirement strategy. The account accumulates and compounds tax-free for decades, then provides tax-free income for healthcare expenses in retirement, when those costs tend to be highest.
What Happens If You Spend on Non-Eligible Items
If you use HSA funds for something that isn’t a qualified medical expense before age 65, you’ll owe income tax on the withdrawal plus a 20% penalty. After 65, the penalty disappears but the income tax still applies. Keep receipts for any HSA purchases in case of an audit. There’s no time limit on reimbursing yourself, so if you pay for a medical expense out of pocket today, you can withdraw from your HSA to reimburse yourself years later, as long as you have documentation and the expense occurred after the HSA was established.