HSA Qualified Medical Expenses: The IRS Test and the Records to Keep

Short answer

Under IRS Publication 969, HSA qualified medical expenses are amounts the account holder pays for “medical care” as defined in Internal Revenue Code section 213(d), for themselves, a spouse or a dependent, but only to the extent insurance or another source has not paid them. The expense must also have been incurred after the HSA was established. This page gives the four tests as a checklist and lists the records to keep. It is general information, not tax or medical advice.

Definition and scope

Publication 969 defines qualified medical expenses as amounts paid by the HSA beneficiary for medical care under section 213(d) for the individual, the individual’s spouse and any dependent, “but only to the extent the amounts are not compensated for by insurance or otherwise.” It adds that amounts paid for menstrual care products are treated as paid for medical care. The definition of medical care itself comes from the same tax rules behind the medical expense deduction. IRS Publication 502 describes medical expenses as the costs of diagnosis, cure, mitigation, treatment or prevention of disease, and says they can include devices used in diagnosing and treating illness and disease and medical supplies such as bandages.

For the list of specific supplies and equipment, see the companion guide on HSA eligible items and medical supplies. This page covers the test an item has to pass and the paper trail behind it.

The four tests an expense must pass

Publication 969 does not number these tests. The checklist below combines its wording on qualified medical expenses, timing, reimbursement and recordkeeping.

Test	What the IRS wording says	Source
1. Medical care	The payment is for “medical care” as defined in section 213(d).	Pub. 969, qualified medical expenses
2. After the HSA was established	“Expenses incurred before you establish your HSA aren’t qualified medical expenses.” State law determines when an HSA is established.	Pub. 969
3. Not compensated by insurance or otherwise	Only the part of the amount not paid or reimbursed by insurance or another source counts.	Pub. 969
4. Not taken as an itemized deduction	You can’t deduct, as an itemized deduction on Schedule A, qualified medical expenses equal to the tax-free HSA distribution. Records must show the expense was not taken as an itemized deduction in any year.	Pub. 969

An expense that fails any one test is not a qualified medical expense for that distribution. Test 1 is where most supply questions sit; tests 2 to 4 are about timing and double-counting, and they apply equally to a bandage and to a medical device.

Medical supplies and devices under the IRS wording

Publication 502 states that you can include the cost of devices used in diagnosing and treating illness and disease, and medical supplies such as bandages. It also states that, generally, cosmetic surgery and household help (even if a doctor recommends it) cannot be included. Those statements are written for the medical expense deduction, and Publication 969 ties HSA qualified expenses to the same section 213(d) definition of medical care. Whether a particular product is medical care depends on its use, not its category. For background on what counts as a device, see what is a medical device. Where an item’s status turns on a clinician’s recommendation, see letter of medical necessity for HSA and FSA.

Keep three rules apart

• The itemized-deduction rule (Publication 502). It governs what can be deducted on Schedule A. Its wording, such as the treatment of non-prescribed drugs, is not the HSA rule and should not be copied across.
• The HSA test (Publication 969). The four tests above.
• Your plan or insurer’s coverage rules. Whether a plan reimburses an item is a separate question from whether the HSA can pay for it. Insurance payment matters here only because test 3 excludes amounts compensated by insurance.

What happens if it is not qualified

Publication 969 states that distributions used for other reasons are subject to income tax and may be subject to an additional 20% tax. It also states there is no additional tax on distributions made after the date the account holder is disabled, reaches age 65 or dies. The trustee reports distributions on Form 1099-SA, and the account holder reports on Form 8889, which Publication 969 says applies even when everything was used for qualified expenses.

Records to keep

Publication 969 says you must keep records sufficient to show that:

• the distributions were exclusively to pay or reimburse qualified medical expenses;
• those expenses had not been previously paid or reimbursed from another source; and
• the expenses had not been taken as an itemized deduction in any year.

It also says not to send these records with the tax return; keep them with your tax records. The publication does not prescribe a document format. A practical reading, which is an editorial interpretation rather than an IRS rule, is that an itemized receipt showing the item, date and payer, together with any insurer explanation of benefits, lets a reader answer each of the three points above. Organizations that buy supplies on a purchasing card face separate rules; see government purchase card rules.

Common misunderstandings

“Any health-related purchase qualifies.”

No. The purchase has to be medical care under section 213(d). Publication 502 gives examples of what generally cannot be included, such as cosmetic surgery and household help.

“Insurance premiums are qualified.”

Publication 969 says HSA funds generally cannot pay for insurance, with exceptions for long-term care insurance, health care continuation coverage such as COBRA, coverage while receiving unemployment compensation, and certain coverage for people 65 and older (not Medigap).

“Expenses before opening the account count.”

They do not. Test 2 turns on the date the HSA was established under state law.

“Send receipts with the return.”

Publication 969 says not to; keep them.

FAQ

What are HSA qualified medical expenses?

Amounts the account holder pays for medical care under section 213(d) for themselves, a spouse or a dependent, to the extent not compensated by insurance or otherwise, and incurred after the HSA was established (IRS Publication 969).

Which medical supplies are HSA eligible?

Publication 502 names devices used in diagnosing and treating illness and disease and medical supplies such as bandages as items that can be included in medical expenses. For a longer list, see HSA eligible items.

Do I need to prove an expense was qualified?

The IRS requires you to keep records showing the distribution paid for qualified expenses, that nothing else reimbursed them, and that they were not itemized. You do not send them with the return.

Sources

• Internal Revenue Service, Publication 969, Health Savings Accounts and Other Tax-Favored Health Plans, read 2026-11-01.
• Internal Revenue Service, Publication 502 (2025), Medical and Dental Expenses, read 2026-11-01.