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.
Anymore questions?
Filed under: business, health, health & wellness, healthcare, hsa education, Uncategorized | Tagged: health savings account, hsa cough medicine, hsa education, hsa otc drugs, hsa qualified expenses, qualified medical expenses, what is an hsa |
Hi there, I still don’t understand why the IRS 502 publication seems to say that over-the-counter drugs are not covered, even though my HSA bank list them as eligible.
Was there a ruling or something that I miss, or the 502 publication is out-dated?
JT
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ok, not knowing exactly what you are looking at in IRS 502 and what your bank says, only enables me to speculate. That said, what I am thinking is that you may be mixing up medical expenses which are deductible from your taxes if the total exceeds 7.5% of your Adjusted Gross Income with what expenses you may reimburse yourself from your Health Savings Acccount. If I am reading this correctly, (and this is a big if), then it may be the hang up. OTC meds (cough medicine, asprin, etc.) do not count as medical expenses when it comes to deducting them from your Income Tax, if in the unfortunate event your medical expenses in total exceed 7.5% of your AJI. However, you may reimburse yourself from your Health savings account for OTC meds so long as you make the proper notation of that when you file your taxes. I am neither an accountant nor a banker so if this is still confusing to you, you may want to speak with your accountant, banker or benefits manager (if your HDHP/HSA is offered through your employer). Hope this helps.
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Hi JT, I believe you are comparing apples with oranges. IRS 502 relates to what medical expenses you can deduct from your taxes. I believe, what your bank refers to is what medical expenses you can pay for from your HSA. You can not deduct OTC expenses from your income taxes (you can’t deduct any medical expenses from your income taxes unless they exceed 7.5% of your adjusted gross income). You CAN pay for OTC expenses from you Health Savings Account. These are two different things. That said, and not to confuse you even more, but if your medical expenses exceed 7.5% of your adjusted gross income and you do deduct them from your income taxes, you can not count any expenses that you paid for from you HSA in the deduction, nor can you reimburse yourself later for those expenses from your HSA that were deducted earlier.
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Do you need a doctors prescription for OTC medicines? I have chronic allergies and it would defeat the purpose of using my HSA account to purchase OTC allergy meds and decongestants if I had to pay for a doctor’s visit to obtain the “prescription” for these medicines each time I needed to purchase them.
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So the short answer to your question is NO, you do not need a Dr’s prescription to purchase OTC drugs. Unforrtunately, you can not use your HSA $s to pay for OTC any longer. And the nature of OTC Drugs (over the counter) means you do not need a prescription to pay for them. Sooooo, if it your allergy meds require a pharmacist to fill the order, you can pay for them from your HSA, otherwise, you will have to pay for them on your own.
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