Jeffrey Salazar
Health Savings Accounts (HSAs) are a great way to save on medical costs, but what about diet drinks? In general, food and beverage purchases are not covered by HSAs, as they are considered to be for general health and well-being rather than medical treatment. However, there are some exceptions. For example, if a person has a specific medical condition that requires a special diet, such as a gluten allergy, then the cost of gluten-free food may be eligible for reimbursement, but only for the additional cost above a standard equivalent. Nutritional supplements and vitamins are also not usually covered, unless they are recommended by a medical practitioner for a specific condition. Transportation costs for medical reasons, COVID-19 tests, and some over-the-counter medications are also covered by HSAs.
| Characteristics | Values |
|---|---|
| Diet drinks covered by HSA | Diet drinks are not covered by HSA in the vast majority of cases. |
| Diet food covered by HSA | Diet food is not covered by HSA unless it is necessary for a medical condition such as a gluten allergy. |
| Nutritional supplements covered by HSA | Nutritional supplements are not covered by HSA unless they are recommended by a medical practitioner as treatment for a specific medical condition. |
| Weight-loss programs covered by HSA | Weight-loss programs are not covered by HSA unless the weight loss is a treatment for a specific disease diagnosed by a physician. |
| Stress reduction items covered by HSA | Stress reduction items are not covered by HSA unless they are medically necessary for a particular condition. |
| Transportation costs covered by HSA | Transportation costs are covered by HSA if the transportation is primarily for and essential to medical care. |
| At-home COVID-19 test reimbursement covered by HSA | At-home COVID-19 test reimbursement is covered by HSA unless the full cost has been covered by a health plan. |
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What You'll Learn
Diet drinks are not covered by HSA unless medically necessary
Diet drinks are generally not covered by HSA as they are considered to be regular food purchases. HSA owners cannot include the cost of diet food or beverages in medical expenses because these substitute for what is normally consumed to satisfy nutritional needs. However, in some cases, specialty foods may qualify if necessary for a medical condition, such as a gluten allergy. For example, if a person requires gluten-free foods due to a gluten allergy, the increased cost of these specialty food items compared to non-specialty items may be covered.
To be covered by HSA, food must meet specific criteria. Firstly, the food should not satisfy normal nutritional needs. Secondly, it should alleviate or treat an illness, and this need should be substantiated by a physician. This substantiation can include a written prescription or order from the physician.
Nutritional supplements, including vitamins and herbal supplements, are also not typically covered by HSA. However, if these supplements are recommended by a medical practitioner as treatment for a specific medical condition, they may be eligible for reimbursement.
It is important to note that qualified medical expenses (QMEs) are designated by the IRS and are subject to change. Therefore, HSA owners should verify that their expenses are designated as QMEs by the IRS and their plan sponsor. Additionally, HSA owners should consult their benefits administrators and doctors to determine if their dietary restrictions can be covered under their benefits.
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Nutritional supplements are covered by HSA if they treat a specific medical condition
Nutritional supplements, vitamins, and weight-loss programs are typically not qualified medical expenses under IRS rules and are not covered by HSA. This is because they are considered to be taken for general health reasons and are not deemed to be for medical care.
However, nutritional supplements are covered by HSA if they are recommended by a medical practitioner or health professional as treatment for a specific medical condition. This could include a direct condition such as sarcopenia, which can be treated with creatine supplements. Prenatal vitamins, glucosamine, and fiber laxatives are also eligible for HSA reimbursement.
To qualify for reimbursement, it is best to have documentation from a medical provider citing the recommendation and the specific condition. This could be in the form of a simple note or a letter of medical necessity (LOMN). The cost of special food may also be included if it does not satisfy normal nutritional needs, alleviates or treats an illness, and is substantiated by a physician.
It is important to note that HSA eligibility for nutritional supplements is specific to each individual's situation and benefits package. Account holders should consult their benefits administrators and doctors to determine if their dietary restrictions and supplement needs can be covered under their benefits.
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HSA covers transportation costs for medical purposes
Diet drinks are generally not covered by HSA as they are considered to be a substitute for what is normally consumed to satisfy nutritional needs. However, HSA owners can include the cost of special food if it does not satisfy normal nutritional needs, treats or alleviates an illness, and is substantiated by a physician.
Transportation costs for medical purposes are covered by HSA. This includes the cost of travel that is primarily for and essential to medical care. This can include the cost of tickets for bus, taxi, train, plane, ferry, and ambulance services. Out-of-pocket costs for car expenses such as gas and oil, parking, and tolls are also covered. Medically necessary modifications to a car or van, such as ramps and lifts, are also considered qualified medical expenses. However, the cost of the car or van itself is not covered.
It is important to note that transportation costs for medical treatment of drug addiction are only covered if the treatment is necessary for the treatment of a disease involving the excessive use of drugs. HSA also does not cover transportation costs for commuting to and from work, even if an individual's condition requires an unusual means of transportation.
In addition to transportation costs, HSA may also cover other expenses related to medical care, such as the cost of blood sugar test kits for diabetics, personal protective equipment to prevent the spread of COVID-19, and certain nutritional supplements that are recommended by a medical practitioner for a specific medical condition.
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HSA covers COVID-19 test reimbursement
Diet drinks are generally not covered by HSA as they are considered to be consumed to satisfy nutritional needs. However, HSA owners can include the cost of special food that does not satisfy normal nutritional needs, treats an illness, and is substantiated by a physician.
On February 4, 2022, the U.S. Department of Labor (DOL), U.S. Department of the Treasury, and U.S. Department of Health and Human Services (HHS) issued guidance clarifying the required coverage of over-the-counter (OTC) COVID-19 tests. This guidance, which took effect on January 15, 2022, provides greater flexibility for employer health plans and health insurers.
Under this guidance, OTC COVID-19 tests may be eligible for reimbursement under account-based plans such as health flexible spending accounts (FSA) or health reimbursement arrangements (HRA). However, it is important to note that participants cannot be reimbursed more than once for the same expense. If an individual's medical plan covers the cost of a test, they cannot seek additional reimbursement from an FSA or HRA. Similarly, if reimbursed through a medical plan, individuals cannot take a distribution from their HSA for the same cost.
To prevent fraud and abuse, plans and insurers may limit coverage to tests purchased from established retailers and may require documentation of the purchase, such as a receipt or serial number. The guidance emphasizes that plans and issuers should communicate key information about where and how participants can take advantage of the coverage of OTC tests.
In addition to test reimbursements, HSA or FSA funds can also be used to purchase products that protect against COVID-19, such as hand sanitizers containing at least 60% alcohol, face masks, and thermometers.
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HSA covers childcare if guardians are gainfully employed
Child care is not eligible for reimbursement with a health savings account (HSA). However, it is eligible for reimbursement with a dependent care flexible spending account (DCFSA). A DCFSA is a unique employee benefit that allows workers to set aside pre-tax dollars to pay for eligible care expenses for a child, disabled spouse, elderly parent, or other individuals listed as dependents who are physically or mentally incapable of self-care.
To qualify for reimbursement, the expenses must be "employment-related," meaning they enable the employee and spouse to be gainfully employed by providing "care" to a qualifying individual. "Care" can be provided in a variety of different arrangements and places, including inside and outside the home, and can include nannies, au pairs, housekeepers, or other similar arrangements where the service provider cares for children under the age of 13. Additionally, eligible expenses may include summer day camp for kids under 13, before and after school programs, and payment for family members or relatives who provide care so that both the employee and spouse can work.
It is important to note that there are specific requirements for when an expense will qualify as "employment-related," and administrators should be consulted before utilizing funds. Additionally, the minimum and maximum amounts that can be contributed to a DCFSA are set by the employer, with a maximum of $5,000 for individuals or married couples filing jointly, or $2,500 for a married person filing separately, as set forth by the IRS.
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Frequently asked questions
Diet drinks are usually not covered by your HSA. However, in rare cases, if the drink is necessary for treating a specific medical condition, such as a gluten allergy, it may be eligible for reimbursement.
Food and drink items are generally not covered by your HSA. However, some nutritional supplements and alternatives may be eligible for reimbursement if they are deemed medically necessary for treating a specific condition.
A medical necessity is defined by the IRS as "the costs of diagnosis, cure, mitigation, treatment, or prevention of disease, and the costs for treatments affecting any part or function of the body".
To get reimbursed for eligible food and drink items, you will likely need to provide a Letter of Medical Necessity (LMN) from a licensed medical professional. It is also the member's responsibility to verify that expenses are designated as Qualified Medical Expenses (QMEs) by the IRS and the plan sponsor.
