What are some creative ways to spend my HSA money?

Editorial team Published on

You can use your HSA for surprising everyday health items, medical travel, and specialized wellness care.

💡 Everyday Items

  • High-SPF sunscreen and lip balm (SPF 15+)
  • Menstrual underwear and period panties
  • Medical alert bracelets or smart rings

What cool things can you use HSA for?

You can use your Health Savings Account (HSA) to buy cool wellness tech, specialized gear, and cover unique health services beyond basic doctor visits.

High-Tech Wellness & Fitness Gear

  • Massage guns and foam rollers: Popular devices like Theragun or general percussion massagers often qualify to treat muscle pain.
  • Smart rings and trackers: Advanced wearables that monitor vital signs, sleep, and heart metrics (like an Oura Ring or specific smartwatches) are often eligible if used for health tracking.
  • Red-light therapy and acne masks: Light-based skincare tools qualify when treating diagnosed medical skin conditions.
  • Infrared sauna blankets: Portable saunas and specific wellness blankets can be covered if tied to a medically directed treatment plan.

Unexpected Everyday & Travel Items

  • Sunscreen and lip balm: Any sunscreen with SPF 15 or higher is fully eligible year-round.
  • Menstrual and reproductive products: Tampons, pads, period underwear, at-home ovulation tests, and pregnancy tests qualify.
  • Medical travel expenses: You can deduct out-of-town lodging ($50 per night per person) and transit mileage when traveling specifically for medical care.

Items Requiring a Letter of Medical Necessity (LMN)

  • Standing desks and ergonomic chairs: These qualify if a doctor writes an LMN to treat a diagnosed back or spinal condition.
  • Gym memberships and fitness equipment: Treadmills or exercise bikes can be covered if prescribed by a physician to treat a specific condition like obesity or diabetes.
  • Air purifiers and humidifiers: These become eligible when recommended by a specialist to manage severe asthma or allergies.

What is the HSA loophole?

The "HSA loophole" typically refers to the reimbursement (or shoebox) strategy, where you pay for medical expenses out of pocket today and wait years to withdraw the money tax-free, letting your Health Savings Account (HSA) compound like a supercharged retirement fund.

💡 The Reimbursement Strategy ("Shoebox Rule")

  • No expiration date: The IRS sets no deadline to reimburse yourself for qualified medical costs.
  • Invest and grow: Pay medical bills with regular cash or credit, then leave your HSA funds invested for decades.
  • Tax-free cash out: Withdraw the money tax-free years later by matching it to those saved old receipts.
  • Strict rule: The HSA must have been open at the time the original medical expense occurred.

👨‍👩‍👧 The Adult Child Loophole

  • Double family limits: Adult children up to age 26 can stay on a parent's High-Deductible Health Plan (HDHP).
  • Independent filing: If that young adult is no longer claimed as a tax dependent, they can open their own HSA.
  • Full contribution: The adult child can contribute up to the full family or individual limit independently from the parents.

🛑 Risks & Rules to Watch

  • Total loss of records: Lose your receipts, and you cannot legally do a tax-free delayed reimbursement.
  • Estate taxes: Unspent HSA funds left to non-spouse heirs become fully taxable income all at once.
  • Eligibility requirement: You must actively have an HDHP to contribute.

What does Dave Ramsey say about HSA?

Dave Ramsey and his team at Ramsey Solutions view a Health Savings Account (HSA) as a powerful, tax-advantaged tool, but they emphasize that it must be used at the right time and paired with the correct insurance plan.

Core Views on HSAs

  • Triple Tax Advantage: Ramsey highlights that HSAs offer three tax benefits: contributions go in tax-free, the money grows tax-free, and withdrawals are tax-free when used for qualified medical expenses.
  • The "Stealth IRA": His team refers to the HSA as a stealth retirement account because the funds roll over year-to-year and can be invested like a 401(k) or IRA. After age 65, you can withdraw money for any purpose (though non-medical withdrawals are taxed like a traditional 401(k)).
  • Requires an HDHP: You must be enrolled in a High-Deductible Health Plan (HDHP) to qualify and contribute to an HSA. Ramsey notes that lower monthly premiums on HDHPs benefit very healthy individuals or those with predictable costs.

Rules and Priorities in the Ramsey Plan

  • Don't Invest Too Early: Ramsey advises against using your HSA as part of your primary 15% retirement investing goal during the early Baby Steps. Standard retirement accounts like a 401(k) and Roth IRA should handle your main 15% investment allocation.
  • Prioritize Debt First: He warns people not to let the excitement of an HSA distract them from paying off pressing consumer debt (Baby Step 2), stressing that basic debt payoff always comes before funding optional savings components.
  • Use for Medical Costs First: Treat the HSA primarily as an emergency fund for health care costs rather than a speculative investment vehicle, unless you are already financially secure.

Can I buy an Apple Watch with my HSA?

You can buy an Apple Watch with your Health Savings Account (HSA) only if you have a Letter of Medical Necessity (LMN) from a licensed healthcare provider.

How Eligibility Works

  • General Wellness Excluded: The IRS considers smartwatches and fitness trackers to be general lifestyle and wellness devices by default, meaning they are not automatically eligible.
  • Medical Necessity Required: To use pre-tax HSA funds legally, your doctor must prescribe the watch to diagnose, treat, or monitor a specific diagnosed medical condition (such as cardiac arrhythmias, hypertension, or diabetes).
  • Risk of Penalties: Buying an Apple Watch directly with your HSA card without an LMN risks an IRS audit, resulting in income taxes and a 20% penalty on the ineligible withdrawal.

Steps to Purchase

  1. Consult Your Doctor: Ask your physician to write a signed Letter of Medical Necessity (LMN) detailing your specific medical condition and explaining how the Apple Watch is necessary for treatment or monitoring. Some online wellness platforms or services like Truemed also facilitate this evaluation.
  2. Save Documentation: Keep the LMN and your itemized receipt stored securely with your tax records for substantiation in case of an audit.
  3. Pay or Reimburse: Purchase the watch using your personal funds or HSA debit card, then submit the receipt and LMN to your HSA administrator if you require formal reimbursement approval.

How To Invest Like The 1% Using An HSA (Step By Step)

9 related questions found

Can I buy toilet paper with my HSA card?

No, you cannot buy standard toilet paper with an HSA Store card because it is classified as a general personal hygiene product rather than a qualified medical expense.

Why Toilet Paper is Ineligible

  • Personal Use: Items used for everyday hygiene and general living are excluded by IRS guidelines.
  • No Medical Diagnosis: Toilet paper does not treat, prevent, or mitigate a specific diagnosed medical condition.

Exceptions

  • Prescription/LMN: You can use HSA funds if a licensed medical professional provides a formal Letter of Medical Necessity (LMN) or a prescription stating that the item is required to treat a specific medical condition.

What is the smartest way to use an HSA?

The smartest way to use a Health Savings Account (HSA) is to contribute the maximum amount, invest the funds for long-term growth, pay for today's medical care out of pocket, and save your receipts to reimburse yourself tax-free years later.

Read the T. Rowe Price Guide for more details on unlocking tax savings.

Understand the Triple-Tax Advantage

An HSA offers a rare triple-tax benefit for federal taxes:

  • Tax-deductible: Money you put in lowers your taxable income right now. If you use payroll deductions, you also skip FICA taxes.
  • Tax-free growth: Any money you invest grows without taxes on the gains.
  • Tax-free withdrawals: You pay zero taxes when you take money out for qualified medical costs.

Max Out Contributions and Invest

Treat your HSA like a retirement account instead of a regular bank account.

  • Contribute the max: For 2026, you can put in up to $4,400 for an individual and $8,750 for a family. People aged 55 and older can add an extra $1,000.
  • Invest the balance: Do not let the cash sit idle. Move your funds into low-cost index funds or mutual funds so your money compounds over time.

Pay Out of Pocket and Save Receipts

This is the ultimate HSA trick.

  • Pay for your doctor visits or prescriptions using your regular credit card or checking account.
  • Keep digital copies of all your medical receipts.
  • Leave your HSA invested to grow.
  • Withdraw the cash tax-free years or decades later when you need extra money. The IRS has no time limit on when you must reimburse yourself, as long as you had the HSA open when the medical expense happened.

Use it in Retirement

Your HSA turns into a flexible tool as you age.

  • After age 65, you can withdraw money from your HSA for any non-medical reason without a penalty, though you will pay ordinary income tax (just like a traditional IRA).
  • If you use the money for medical care, it stays 100% tax-free.
  • Unlike 401(k)s, HSAs do not force you to take required minimum distributions (RMDs).

Learn more about this strategy in the Fidelity HSA Insights.

Can I use my HSA for a haircut?

❌ No, you cannot use your Health Savings Account (HSA) for a standard cosmetic haircut.

❌ Why It Is Ineligible

  • Personal care: The IRS classifies standard grooming and haircuts as personal care, not medical expenses.
  • No medical purpose: Funds are strictly reserved for diagnosing, curing, mitigating, treating, or preventing a disease or medical condition.
  • Tax penalties: Using HSA funds for non-qualified expenses triggers ordinary income tax plus a 20% IRS penalty.

⚠️ The Rare Exception

  • Medical necessity: A haircut might qualify only if a licensed physician writes a formal Letter of Medical Necessity (LMN) stating it treats a specific diagnosed medical condition (such as a severe scalp disorder requiring specialized medical trimming).
  • Wigs for hair loss: While the haircut itself remains personal, a wig due to medical hair loss (like chemotherapy) can sometimes be eligible.

What is the downside of having an HSA?

The main downside of a Health Savings Account (HSA) is that you must be enrolled in a high-deductible health plan (HDHP), which means you must pay more out-of-pocket for medical care before your insurance starts paying.

Key Drawbacks of an HSA

  • High Deductibles: An HDHP requires you to pay a large amount of medical costs yourself before insurance kicks in. This can be a financial strain if you have sudden emergencies or chronic health conditions.
  • Strict Penalty Rules: If you take money out for non-medical reasons before you turn 65, you must pay normal income tax plus a heavy 20% IRS penalty.
  • Account and Investment Fees: Some financial institutions charge monthly maintenance fees or investment fees to manage the account.
  • Medicare Restrictions: You must stop contributing to your HSA once you enroll in Medicare, or you may face tax penalties.
  • Record Keeping: You must save your medical receipts and track your spending to prove to the IRS that your withdrawals were for qualified medical expenses.

Does it make sense to max out HSA?

You should max out your Health Savings Account (HSA) if you are enrolled in an eligible High-Deductible Health Plan (HDHP) and have your basic financial foundations secured.

An HDHP is a health insurance plan with higher deductibles than traditional plans, lower monthly premiums, and official eligibility to open and fund an HSA.

The Benefits of Maxing Out Your HSA

  • Triple Tax Advantage: Contributions are tax-free (or tax-deductible), money grows tax-free, and withdrawals are tax-free when used for qualified medical expenses.
  • FICA Tax Savings: Contributing via payroll deduction reduces your Social Security and Medicare taxes by 7.65% (or more depending on your income).
  • Rolls Over Forever: Unlike Flexible Spending Accounts (FSAs), your money never expires and stays with you even if you change jobs or retire.
  • Retirement Flexibility: After age 65, you can withdraw money penalty-free for any non-medical purpose, paying only ordinary income tax (like a traditional 401k or IRA).

When You Should NOT Max Out Your HSA

  • You lack an emergency fund: Cash flow stability and liquid savings come first.
  • You have high-interest debt: Pay off costly credit card or personal loan debt before prioritizing extra savings.
  • You cannot afford your medical deductible: If a health emergency would wipe you out and you need your cash to pay upfront medical costs out-of-pocket, keep funds liquid instead of locked or invested.
  • You miss out on a 401(k) match: Always grab your full employer 401(k) match first before maxing out other accounts.