Allowable expenses under a Health Savings Account are generally the same as those allowed under qualified medical and dental expenses for your federal income tax filing, the Internal Revenue Service says. Knowing which expenses are qualified will aid your financial tax planning. As with any medical expense tax claim, you must have doctor-prescribed documentation and receipts available in case the IRS requests them.
Insurance Premiums
Even though insurance premiums paid are usually not considered qualified medical expenses, the IRS makes some exceptions. According to the IRS Publication 969 (Health Savings Accounts and Other Tax-Favored Health Plans), you can claim expenses paid for long-term health care. There are limits to the amount of your allowable expense, however. The amount is subject to limits "based on age and annual adjustment amounts."
Any payments you have made for health-care continuation coverage, such as that for COBRA are allowed. This includes payments for yourself, your spouse or your dependent. Health-care coverage payments made while you are collecting federal or state unemployment compensation are allowed. This applies for payments made to cover your spouse or dependent.
Finally, if you are over the age of 65, you are allowed to claim any premiums you pay for Medicare or other health care coverage. These premiums will be disqualified if you, the account beneficiary, are not at least 65.
Home Alterations
If you paid any expenses to alter your home in order to accommodate a disability affecting either you, your spouse or a dependent, the IRS Publication 502 (Medical and Dental Expenses) states this may be a qualified medical expense for HSA purposes. However, the improvement cannot add to the value of your home in order to remain as a qualified expense. Examples of improvements include adding a wheelchair access ramp, modifying entrance and/or exit doorways, widening or modifying hallways and interior doorways, modifying or lowering kitchen cabinets and equipment, installing porch lifts and modifying electrical outlets.
Nonprescription Medications
Even though nonprescription (also known as over-the-counter) medications are not allowed under qualified medical and/or dental expenses for purposes of your federal income tax filing, they are considered as qualifying expenses for purposes of the HSA.
Weight Loss Programs
If you incurred any costs related to a weight loss program involving "a treatment for a specific disease diagnosed by a physician (such as obesity, hypertension or heart disease)", the IRS states this is a qualified medical expense for your Health Savings Account and federal income tax purposes. This includes any amounts you paid as membership fees for joining a weight reduction group. It also includes any fees you paid for attending periodic meetings of the group.
Special Food
Any money you paid for special food may be an allowable expense for purposes of your HSA, cites the IRS in Publication 502. The amount of your qualified expense, however, is limited "to the amount by which the cost of the special food exceeds the cost of a normal diet." The special food must not satisfy your normal nutritional needs. It must be substantiated by a physician to treat or alleviate an illness in order to qualify as an allowance HSA expense.
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