Health savings accounts (HSAs) have become increasingly popular in recent years as a tool to help with the high costs of healthcare. Money you put here reduces your taxable income for the year, and if you spend it on qualifying medical expenses, it's tax-free.
But not everyone is clear on what products and services are HSA-eligible. It's always a good idea to check with your plan provider if you're not sure what's allowed. But here are 10 common expenses that are generally covered.
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1. Labor and delivery
The average cost of pregnancy, childbirth, and postpartum care in the U.S. is around $18,865, according to the Peterson-Kaiser Family Foundation Health System Tracker. Average out-of-pocket costs are $2,854 for women enrolled in large group insurance plans. All of this care is typically HSA-eligible, so you don't have to save up for it separately.
2. Other pregnancy-related costs
In addition to labor and delivery, you can use HSA funds to cover the following pregnancy-related expenses:
- Infertility treatments
- Ultrasounds
- Childbirth classes
- Breast pumps and lactation supplies
3. Dental care
Dental care costs can range from less than $100 for a simple cleaning to well over $1,000 for crowns, fillings, root canals, and dentures. Dental insurance may cover some of these costs, but if you don't have any dental coverage or your policy doesn't cover the full price of your care, you can use HSA funds to cover the rest.
4. Vision care
Eye exams can cost around $200 for those who don't have vision insurance, and even those that do may still pay some out-of-pocket expenses for the exam and any prescriptions they receive. Those interested in getting LASIK eye surgery are looking at a few thousand dollars, even if they're only doing one eye. But if you have the money in your HSA, you can put that money toward your vision care rather than tapping your other savings.
5. Mental healthcare
Therapy costs can be as much as $200 a session, depending on where you live and the therapist's training. That could easily amount to thousands of dollars per year. And those prescribed medications will face additional costs. But whether you see a psychologist or a psychiatrist, your treatment expenses should be HSA-eligible.
6. Birth control
All manner of birth control, including pills, injections, and intrauterine devices (IUDs), are typically HSA-eligible. Permanent methods of birth control, like tubal ligation or vasectomies, are also eligible.
7. Breast reconstruction surgery following cancer
Elective surgeries, like breast augmentation, typically aren't HSA-eligible. But women who have had mastectomies due to breast cancer can use their HSA funds to pay for their reconstruction surgery.
8. Diabetes supplies
The average cost of a vial of insulin in the U.S. is close to $100, according to the Rand Corporation. Those with the disease could easily spend thousands per year on this essential drug. Insurance may reduce some of the cost, but many people will still pay some out of pocket. Fortunately, you can use HSA funds to cover this.
9. Ambulance fees and emergency care
Ambulance rides and emergency room visits can add up quickly. These unplanned expenses can throw a budget out of whack in a hurry. But if you have HSA funds, you can use this to cover your costs so you don't have to tap your emergency savings.
10. Long-term care
Long-term care can easily cost thousands of dollars per month. You can purchase insurance to help reduce your out-of-pocket costs, but these policies can be pretty expensive themselves. Fortunately, you can use your HSA funds to help cover your premiums. However, you should check to see whether there's a cap on how much of your HSA funds you can use toward long-term care. You can also use the money to cover some long-term care costs directly, like the cost of an at-home nurse or a nursing home stay.
This is far from an exhaustive list of HSA-eligible services. But it should give you some idea of what you can use your HSA funds for. Unlike FSA funds, money you put into your HSA won't expire, so you can bank it for use months or even years down the road.
Just remember to watch out for the annual contribution limits. In 2023, you may put up to $3,650 in an HSA if you have an eligible health insurance plan with a deductible of $1,500 or more. Those with family plans that have deductibles of $3,000 or more may contribute up to $7,750. And adults 55 and older can add another $1,000 to these limits. Be careful not to exceed these amounts if you want to avoid government penalties.
