HSA expenses clients overlook and how advisors recover them

Many health savings account holders do not claim all IRS-eligible medical expenses. Financial advisors report that comparing a client’s medical records to the IRS list of qualified expenses often identifies items that can be reimbursed from an HSA, recovering between $500 and $2,000 a year for some clients.

HSAs are tax-advantaged accounts paired with high-deductible health plans. The accounts cover qualified medical, dental, vision and prescription costs. From 2004 through 2022, HSA contributions totaled about $337.4 billion, and by the end of 2025 HSA investment assets approached $85 billion, a 33% increase year over year. About 4.2 million accounts held invested dollars, up 22% from the prior year.

Advisors say common overlooked expenses include chiropractic care, physical therapy and mental health services. Fitness programs and gym memberships generally do not qualify when bought for general fitness, but they may be eligible if a physician prescribes them to treat a diagnosed condition. Therapies such as counseling and acupuncture can qualify when used for treatment of a medical condition.

Some lesser-known items can also qualify when tied to medical necessity. Wearable health devices, menstrual products, massage therapy, hot and cold packs, certain skin-care products that contain SPF, and home devices such as humidifiers or air purifiers may be eligible if a doctor provides a letter of medical necessity linking them to treatment for a condition.

Cosmetic procedures are typically excluded and can trigger penalties and taxable treatment if the expense is disallowed on audit. Jeff Judge, a financial planner at Chesapeake Financial Planners, frames the eligibility test as whether an expense is primarily for the diagnosis, treatment, cure, mitigation or prevention of disease.

Hardik Patel, founder of Trusted Path Wealth Management, estimates that advisors who review the IRS eligible-expense list line by line against a client’s diagnoses and treatment notes commonly find hundreds to a few thousand dollars in reimbursable costs each year. Advisors recommend saving receipts and keeping documentation because the IRS can request proof of eligibility years after a withdrawal.

Advisors describe two common client approaches. Some use the HSA to pay current qualified expenses when they occur. Others pay small bills out of pocket so HSA balances can remain invested and grow tax-free as a retirement supplement. Matthew Hofacre, founder of Pay It Forward Financial Planning, recommends preserving HSA funds when possible and avoiding small withdrawals that reduce the account’s long-term compound growth.

Advisors say proper documentation and conservative judgment matter when deciding what to reimburse. Some expenses require a doctor’s letter of medical necessity or other specific records to qualify. Clients and planners who document purchases and align medical records with the IRS list can reclaim after-tax spending that meets the agency’s criteria and can better manage HSA funds for future medical costs or retirement.