Can I use my HSA dollars for cough medicine? A simple, good and common question, sure enough. And the short answer is YES.
About 250,000 people did google searches last month for HSAs and about 90,000 folks did searches for cough medicine. Some of them did both together, ended up on this site, and unfortunately did not get their question answered. Until today that is.
You can absolutely pay for that cough medicine, flu medicine, allergy medicine and hosts of other OTC expenses from your HSA. If you use your HSA debit card or pay by check, you will need to save your receipt for tax purposes in case your withdrawals ever come into question. You will always have to have receipts that add up exactly to the withdrawals you make from your HSA–this is key.
If you can pay for that cough medicine without dipping into your HSA, that is even better because, by letting your funds stay in the HSA account they will continue to grow tax free. You will need to keep all of the receipts for your cough medicines and other qualified expenses in a file drawer, shoe box or someplace where you can get at them later. At a later point in time you can add all those expenses up, write yourself a check from your HSA, and then when you do your taxes, report the fact that you paid yourself back and have the receipts for back up in case the IRS comes a calling.
There are loads of other “qualified medical expenses” as they are referred to you can pay for from your hsa. There is a good list put together by Fontis Healthand HSAeducator on the HSAeducator.com website you can check out for reference. Or if you want to see the full and most up to date list you can go to the IRS website.
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