Whenever the IRS giveth, it also takes away.
- Babysitting, childcare and nursing services for a normal, healthy baby.
- Controlled substances obtained in violation of federal law.
- Cosmetic surgery.
- Dancing lessons.
- Diaper services.
- Electrolysis or hair removal.
- Funeral expenses.
- Hair transplant.
- Health club dues.
- Household help.
- Illegal operations and treatments.
- Maternity clothes.
- OTC medications, without a prescription
- Personal use items.
- Swimming lessons.
- Teeth whitening.
- Vacation or travel.
- Veterinary fees.
- Weight loss programs for improvement of appearance, general health, or sense of well-being.
Some reminders about qualified medical expenses:
- Drugs must be purchased legally.
- Items that are simply beneficial to one’s general good health, such as vitamins and dietary supplements, are not qualified medical expenses.
- Save receipts and Rx’s for OTC meds for your taxes.
- There are grey areas – say your doctor recommends a vacation for your health. This is still not eligible for reimbursement with your HSA.
- As the HSA owner, it is your responsibility to prove that a healthcare expense is, or is not, eligible; the administrator of the account is (most likely) not your mother!
- If an HSA expenditure is not used for a qualified medical expense, you will have to pay income tax and a penalty on the amount so used. After age 65, there is no penalty.
As of 1 January 2011, expenses for OTC drugs are no longer eligible for payments or reimbursement from an HSA without a doctor’s prescription. This changed with the 2010 healthcare reform legislation. For example, you will need an Rx for the following:
- Acid control medication
- Allergy and sinus meds
- Cold, flu and cough meds
- Pain relief meds
- Sleep aids and sedatives