Definitions

IRS publication 502 (medical) outlines what is and is not an eligible medical expense for an HSA. In general, expenses are considered eligible if the medical care expenses are for the diagnosis, cure, mitigation, treatment or prevention of disease and for treatments affecting any part or function of the body.

The expenses must be primarily to alleviate or prevent a physical or mental defect or illness. Expenses solely for cosmetic reasons generally are not expenses for medical care.

Also, expenses that are merely beneficial to one's general health, such as health spas are not expenses for medical care. A partial list is shown below. Section 213(d) shows what is and is not eligible. Please see IRS publication 502 (medical), Medical and Dental Expenses, for a more detailed list.

Dual Purpose Over-the-Counter Medical Expenses

Items that may have a medical purpose and a personal/cosmetic or general health purpose are called Dual Purpose. Examples include vitamins and supplements that may be for your general health versus required to treat a medical condition.

When trying to determine whether a dual purpose expense is eligible for reimbursement, use the "but for" test: But for this condition, would the person purchase or use the item anyway?

Example: But for the baby's rash, would the parents purchase the diaper rash ointment anyway? Answer: No. The purchase is made only because the baby has diaper rash, and the expense is eligible.

View a list of over-the-counter medical expenses and how they are categorized.