Advisors: Many HSA Expenses Are Overlooked

Health savings accounts can cover a wider range of medical costs than many account holders realize, and advisers report that a review of medical bills against the IRS eligible-expense list often finds recoverable items worth several hundred to a few thousand dollars per year.

HSAs were created in 2004 and are paired with high-deductible health plans. Contributions and earnings in these accounts are tax advantaged when used for qualified medical, dental, vision and prescription expenses. From 2004 through 2022, congressional research shows HSA contributions totaled $337.4 billion. By the end of 2025, invested HSA balances approached $85 billion, a 33% increase from the prior year, and about 4.2 million accounts held invested dollars.

Advisers who compare a client’s medical records to the IRS list commonly identify expenses that the client paid with after-tax dollars but that could have been covered by HSA funds. Hardik Patel, founder of Trusted Path Wealth Management, said a typical review uncovers roughly $500 to $2,000 in eligible expenses per year. Patel added, ‘Advisors who sit down with a client’s medical history and map it against the IRS-eligible services list often find ways to redirect hundreds of dollars annually into the HSA.’

Items advisers frequently flag include chiropractic care, physical therapy, psychotherapy and counseling, acupuncture and portions of long-term care premiums that qualify by age. Several advisers noted that purchases such as home medical equipment, air purifiers or humidifiers, massage therapy, hot and cold packs, and some wearable health devices can qualify if a physician documents medical necessity.

Less-obvious examples reported by advisers include menstrual products, certain wearable devices like sleep trackers and some skincare or makeup items containing SPF when used to treat a medical condition. Sam Mockford, an associate wealth adviser at Citrine Capital, pointed to those examples as commonly overlooked but potentially eligible expenses.

Advisers emphasized limits. Cosmetic procedures are usually disallowed on audit and can trigger penalties plus tax on withdrawn amounts. Jeff Judge, a financial planner at Chesapeake Financial Planners, noted that the IRS applies a test: an expense must be ‘primarily for the diagnosis, treatment, cure, mitigation or prevention of disease.’ He added that treatments such as Botox are eligible only when they address a documented medical condition.

Because account holders must substantiate HSA withdrawals, advisers recommend keeping receipts and medical records. Documentation, including a physician’s letter of medical necessity, is important when claiming items that are not routinely listed as eligible.

Some advisers advise clients to preserve HSA balances by paying small, routine costs out of pocket when feasible, allowing HSA funds to grow and be invested for larger future medical expenses or retirement health costs. Matthew Hofacre, founder of Pay It Forward Financial Planning, recommended treating the HSA as a long-term savings vehicle when short-term finances permit.

The practical steps advisers report taking are straightforward: review medical bills and records against the IRS list, document medical necessity for marginal claims, keep receipts and consider investing HSA balances when suitable. Those steps have led advisers to recover tax-advantaged dollars that clients had been spending outside their HSAs.