What electronics can I buy with my HSA?

Editorial team Published on

You can buy specific health-tracking and diagnostic electronics using pre-tax funds from a Health Savings Account (HSA), often with an Amazon FSA/HSA Store filter or special checkout options via platforms like Truemed.

Common HSA-Eligible Electronics

  • Blood Pressure Monitors: Smart and standard upper-arm or wrist monitors (such as Omron and Withings devices found at Best Buy).
  • Heart Rate & EKG Monitors: Chest strap monitors, personal EKG devices (like KardiaMobile), and optical heart rate armbands.
  • Wearables & Smart Rings: Select health-tracking smartwatches, smart rings (like Oura), and specialized fitness bands when designated for a specific medical condition or backed by a Letter of Medical Necessity (LMN).
  • Therapeutic & Recovery Devices: Massage guns (such as Theragun), air compression recovery boots, and red-light therapy LED masks.
  • Baby & Monitoring Tech: Smart baby monitors with vital-tracking socks (like Owlet or Nanit).

What Requires a Letter of Medical Necessity (LMN)

  • General wellness tech, smart glasses, or standard fitness trackers usually require an LMN from a licensed physician diagnosing a specific condition to qualify.
  • Always keep itemized receipts and check with your specific HSA administrator if you are unsure about a fringe item.

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.

Can I spend my HSA money on anything?

No, you cannot spend your Health Savings Account (HSA) money on just anything without facing penalties, unless you are 65 or older.

Before Age 65

  • Qualified Medical Expenses Only: You can spend your HSA funds tax-free only on IRS-approved medical, dental, and vision expenses (such as doctor visits, prescriptions, over-the-counter medications, glasses, and mental health care).
  • Penalties for Non-Medical Use: If you spend HSA money on non-eligible items before turning 65, you must pay ordinary income tax plus a 20% penalty on the withdrawn amount.

After Age 65

  • Any Purchase Allowed: Once you turn 65, the rules change. You can withdraw HSA money for any purpose (even non-medical expenses like a vacation or a new appliance) without the 20% penalty.
  • Tax Rules in Retirement: If you use the money for non-medical expenses after 65, it is treated like a traditional 401(k) or IRA withdrawal—you just pay standard income tax. If you use it for medical expenses, it remains 100% tax-free.

Can I cash out my HSA balance?

Yes, you can cash out your Health Savings Account (HSA) balance at any time, but the taxes and penalties depend on your age and what you use the money for.

Rules for Cashing Out

  • Qualified Medical Expenses: Withdrawals used for eligible medical care (such as doctor visits, prescriptions, dental work, and vision care) are 100% tax-free at any age. There is no deadline to reimburse yourself, as long as the expense happened after you opened the HSA and you keep the receipts.
  • Non-Qualified Expenses (Under Age 65): If you take cash out for non-medical reasons before turning 65, the withdrawal is subject to ordinary income tax plus a 20% penalty.
  • Non-Qualified Expenses (Age 65 and Older): Once you turn 65, the 20% penalty disappears. You can cash out the balance for any purpose, but you will still owe ordinary income tax on the amount, similar to a traditional IRA or 401(k).

How to Withdraw the Cash

  • Debit Card: Use your HSA-linked debit card for immediate point-of-sale purchases on eligible medical items.
  • Bank Transfer: Log into your HSA provider's online portal or app to request an electronic funds transfer directly to your personal checking or savings account.
  • Reimbursement Checks: Request a physical check or use online bill pay to reimburse yourself for out-of-pocket medical costs you already paid.

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.

What Can the HSA Debit Card Buy? (What Can You Purchase with HSA Funds?)

9 related questions found

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 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 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.

Do I need to keep receipts when I use my HSA card?

Yes, you must keep receipts and matching documentation for every purchase made with your Health Savings Account (HSA) card.

Why You Need Receipts

  • IRS Audits: The IRS requires you to prove that all HSA distributions were used exclusively for qualified, unreimbursed medical expenses.
  • Penalties: If you are audited and cannot prove an expense was eligible, the IRS may treat the withdrawal as taxable income and charge an additional 20% penalty plus interest.
  • Delayed Reimbursements: Many people pay for medical care out-of-pocket and let their HSA funds grow, choosing to reimburse themselves years later. You need to save those receipts indefinitely until you take the distribution.

What Records to Keep

  • Itemized receipts showing the provider's name, date of service, description of the item or service, and amount charged.
  • Explanation of Benefits (EOB) statements from your insurance company.
  • Prescriptions or doctor’s notes if required for specific treatments or items.

How Long to Keep Them

  • Keep your records for at least three years from the date you file the tax return for the year the expense was distributed or paid.
  • If you are banking receipts to reimburse yourself years down the road, you must retain the documentation for the year the expense was incurred plus the years until you finally withdraw the money.

Best Practices for Storage

  • Go Digital: Thermal paper receipts fade over time, so scan physical copies or save PDFs directly from your medical provider's online portal.
  • Use Cloud Storage: Organize files in folders by year using cloud services like Google Drive, OneDrive, or Dropbox.
  • Track via Spreadsheets: Maintain a digital log detailing the date, provider, amount, and category of each expense.

Can I pay for my gym membership with my HSA?

You can pay for a gym membership with your Health Savings Account (HSA) only if a licensed healthcare provider determines it is medically necessary to treat a specific diagnosed condition and provides a Letter of Medical Necessity (LOMN).

Requirements for Eligibility

  • Diagnosed Medical Condition: The exercise must treat or manage a specific condition like obesity, hypertension, diabetes, heart disease, or depression—not just general wellness or weight loss.
  • Letter of Medical Necessity (LOMN): You must obtain this signed letter from your doctor or a qualified clinician before paying for the membership.
  • Documentation: Keep the LOMN, itemized receipts, and your membership contract on file in case of an IRS audit or reimbursement request.

How to Pay and Get Reimbursed

  • Pay Out of Pocket: Most traditional gyms do not accept HSA debit cards at the front desk because their merchant category codes are not classified as medical providers. Pay with a regular credit or debit card and save your receipts.
  • Submit a Claim: File a reimbursement claim with your HSA administrator, attaching both your receipt and the LOMN.
  • Special Platforms: Some fitness brands and online services partner with platforms like Truemed or Burst to help you complete a health intake, secure an LOMN, and streamline HSA reimbursement.