»  Qualified Expenses

What is a qualified medical expense?

A "qualified medical expense" (as defined in IRC Section 213d) includes out-of-pocket expenditures for medical care for the HSA account holder, his or her legal spouse, or tax dependents, so long as such amounts are not reimbursed by insurance or otherwise.

Over-the-counter medications (OTCs) could be an eligible medical expense. Premiums, however, are not "qualified medical expenses" except for the following types of insurance coverage:

• COBRA coverage
• A qualified long-term care insurance contract
• Any health plan maintained while the individual is receiving unemployment compensation under federal or state law; or
• Any deductible health insurance other than a Medicare supplemental policy for those age 65 or older

Generally, all "qualified medical expenses" must be incurred after the Health Savings Account is established in order to be reimbursable on a tax-free basis.

You can view a list of HSA Eligible Medical Expenses here. Additional examples of eligible expenses and ineligible expenses can be found in IRS Publication 502. (Note: While examples listed in Publication 502 are specific to itemized deductions for tax returns, not all are HSA qualified. Consult your tax accountant to ensure accuracy.)