Can You Use an HSA for Cosmetic Surgery?
Of course, not all medical expenses are covered by an individual’s health insurance plan. But that doesn’t mean there’s no relief for out-of-pocket expenses. A health savings account is an excellent employee benefit to accompany a high-deductible health plan, and account-holders should be encouraged to take advantage of these tax-free funds.
Many medical expenses clearly qualify for HSA spending or reimbursement, but when it comes to cosmetic procedures and treatments, the line is not always so clear. So, here are some frequently asked questions about HSAs and cosmetic surgery.
Q: What’s an HSA?
A health savings account (HSA) is a personal bank account with significant tax advantages that can be used by an individual to pay for qualified medical expenses on a compatible high-deductible health plan (HDHP).
Unlike most flexible spending accounts (FSAs), the funds in HSAs are automatically rolled over from year to year and can be used indefinitely so long as the purchase is a qualified medical expense. This is particularly attractive for younger, healthier individuals who don’t usually use the balance of their yearly contributions by the time the term resets.
There’s a limit to the amount that a person or family can contribute to their HSA each year, as determined by the Internal Revenue Service (IRS). Both the employer and employee may contribute to an HSA, and employees are permitted to make contributions either through automatic deposits from regular payroll deductions or through manual deposits. If making manual contributions to an HSA, an individual won’t be able to take advantage of the full tax benefits until they have filed their taxes.
Q: What’s an HSA-Eligible Expense?
If an expense is medically necessary and prescribed by a physician, then it qualifies as an HSA-eligible expense. According to the IRS, HSA-eligible expenses—or qualified medical expenses—include:
- the costs of diagnosis, cure, mitigation, treatment, or prevention of disease, and for the purpose of affecting any part or function of the body.
- payments for legal medical services rendered by physicians, surgeons, dentists, and other medical practitioners.
- the costs of equipment, supplies, and diagnostic devices needed for these purposes.
To further clarify, the IRS insists, “Medical care expenses must be primarily to alleviate or prevent a physical or mental disability or illness. They don't include expenses that are merely beneficial to general health, such as vitamins or a vacation.” The penalty for using HSA funds for ineligible expenses is the amount of the withdrawal plus income tax— with an additional 20% tax applied unless you are over 65.
For a comprehensive, but not exhaustive list of eligible expenses, see the IRS’s What Medical Expenses Are Includible? Alternatively, a list of ineligible expenses—again, comprehensive, but not exhaustive—is provided by the IRS.
Q: Can You Use an HSA for Cosmetic Surgery?
Given the IRS’s definition, most cosmetic surgery does not qualify as an HSA-eligible expense—including “any procedure that is directed at improving the patient’s appearance and doesn't meaningfully promote the proper function of the body or prevent or treat illness or disease.”
However, some cosmetic surgery may meet the definition of a qualified medical expense if “it is necessary to improve a deformity arising from, or directly related to, a congenital abnormality, a personal injury resulting from an accident or trauma, or a disfiguring disease.” These HSA-eligible expenses include dental implant surgery and laser eye surgery.
Q: Can You Use an HSA for Plastic Surgery?
While many use the terms “plastic surgery” and “cosmetic surgery” interchangeably, the American Board of Cosmetic Surgery distinguishes between the two. Cosmetic surgery is “entirely focused on enhancing a patient’s appearance” whereas plastic surgery is “dedicated to reconstruction of facial and body defects due to birth disorders, trauma, burns, and disease.”
Given this distinction, most plastic surgery—such as breast reconstruction surgery— would qualify as an HSA-eligible expense since it is “intended to correct dysfunctional areas of the body.”
Q: Can You Use an HSA for Cosmetic Dermatology?
While many dermatological procedures are HSA-eligible, it may be necessary to obtain a Letter of Medical Necessity from the dermatologist.
Aesthetic issues such as wrinkles or dark spots usually do not qualify, but skin cancer and acne treatments usually do, even when insurance will not cover them. HSA funds can also be used to purchase dermatological prescriptions.
Q: Can You Use an HSA for Botox?
Botox treatments that are not medically necessary are not HSA-eligible. There are, however, some cases in which Botox may qualify, such as treatment for migraines or for dental procedures.
A Letter of Medical Necessity from a doctor or dentist may be required to use HSA funds for Botox.
Q: Can You Use an HSA for Breast Augmentation?
Since breast augmentation is a cosmetic procedure, it is not an HSA-eligible expense.
Q: Can You Use an HSA for LASIK Surgery?
The IRS does list eye surgery, such as LASIK, as an HSA-eligible expense.
Similarly, eye exams, glasses, and contact lenses also qualify as medically necessary expenses.
Q: Can You Use an HSA for Liposuction?
Although liposuction is generally not an HSA-eligible expense, weight-loss programs used as a treatment for specific, physician-diagnosed diseases—such as obesity, hypertension, and heart disease—may qualify.
The IRS does note, however, that weight-loss programs do not qualify if “the purpose of the weight loss is the improvement of appearance, general health, or sense of well-being.”
Q: Can You Use an HSA for Medication or Supplies Related to an Uncovered Procedure?
It depends. If medication or supplies related to a procedure not covered by health insurance are deemed necessary by a doctor or dentist, then they may be HSA-eligible. A Letter of Medical Necessity may be required.
However, if “uncovered” refers to a procedure outside the IRS’s definition of a qualified medical expense, then HSA funds may not be used for medication or supplies related to that procedure.
Q: How Do You Obtain a Letter of Medical Necessity for Cosmetic Procedures?
Most major HSA account administrators have their own Letter of Medical Necessity form that account holders can ask their doctor or dentist to fill out.
Some administrators may accept a letter written by a physician rather than a printable or fillable form, but at minimum, documentation must meet the IRS’s necessary and specific criteria: “Medical care expenses must be primarily to alleviate or prevent a physical or mental disability or illness. They don't include expenses that are merely beneficial to general health, such as vitamins or a vacation.”
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