What is HSA eligible at Costco?

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You can use your Health Savings Account (HSA) at Costco for qualified prescriptions, over-the-counter (OTC) medicines, optical needs, and items explicitly tagged as "FSA/HSA Eligible" online or on warehouse shelf tags.

Common HSA-Eligible Items at Costco

  • Pain Relievers & OTC Medicine: Advil, Tylenol, Alka-Seltzer, and Kirkland Signature ibuprofen or allergy medications.
  • First Aid & Care: Neosporin, rubbing alcohol, bandages, and hot/cold packs.
  • Vision & Dental Care: Contact lenses, eyeglasses, contact lens solution, and reading glasses.
  • Health Monitors & Supplies: Blood pressure monitors, glucose meters, and certain diagnostic tests.
  • Incontinence & Feminine Care: Bladder control pads and menstrual care products.

Note: General groceries, membership fees, standard vitamins/supplements (unless prescribed), and fitness equipment like treadmills are generally ineligible without a specific Letter of Medical Necessity.

Where and How to Pay

  • In Warehouses: Traditionally restricted to the pharmacy, optical, and hearing aid counters. However, registers are increasingly configured to process tagged eligible items at standard checkouts. If a mixed cart declines at a standard lane, pay with a standard credit card and submit your itemized receipt to your HSA provider for manual reimbursement.
  • Online: You can buy tagged items on Costco Same-Day Delivery by filtering or looking for the FSA/HSA tag, though online carts generally cannot split payments between an HSA card and a standard credit card.

What is the Costco $20 rule?

The Costco "$20 rule" is shorthand for the warehouse retailer's minimum pay policy that sets a base starting wage floor of at least $20 per hour for entry-level hourly employees in the U.S. and Canada.

Key Details of the Policy

  • Wage Floor: Entry-level staff start at a baseline of $20/hour or higher, which outpaces standard retail minimums set by competitors like Walmart and Target.
  • Scheduled Increases: Under labor agreements, this base entry wage scales upward over time (such as scheduled bumps past $21/hour).
  • Average Pay: Tenured and average hourly workers across the company make significantly more, averaging over $31 an hour.
  • Industry Impact: Financial analysts and news outlets refer to it as the "$20 rule" because it sets a competitive benchmark that pressures other big-box retailers to raise their own compensation packages.

What happens if I use my HSA card for groceries?

Using an HSA card for regular groceries results in the transaction being declined at checkout, or if it goes through, it counts as a non-qualified withdrawal subject to income taxes and a 20% penalty.

What Happens at the Register

  • Declined transaction: Most grocery stores and standard debit card terminals use an inventory system that recognizes item barcodes. If you try to buy standard food, the register will reject the HSA card for those items.
  • Split transactions or partial approvals: At major stores that support advanced inventory scanning (like Walmart or Target), the system will automatically separate eligible health items (like OTC medicine, sunscreen, or first-aid supplies) and charge those to your HSA card, leaving you to pay for the regular groceries with a separate payment method.
  • Accidental full approval: If your card goes through for a full cart containing groceries because the store lacks item-level categorization, the purchase is still a non-qualified expense under IRS rules.

Penalties for Non-Qualified Purchases

  • If you are under 65: You must pay regular income tax on the misspent amount plus a 20% IRS penalty fee.
  • If you are 65 or older: You will not face the 20% penalty, but you will still owe regular income tax on the amount used for non-medical items.

Rare Exceptions

  • Eligible health items: You can buy HSA-eligible over-the-counter products at a grocery store with a pharmacy section using your card.
  • Doctor-prescribed specialized food: If a physician provides a Letter of Medical Necessity (LMN) stating that specific dietary foods or medical meal delivery services are required to treat a specific medical condition, they may qualify.

What to Do If You Made a Mistake

If you accidentally swiped your HSA card for groceries, contact your HSA Administrator immediately to report a mistaken distribution and ask how to repay the account.

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.

Can I use my HSA to buy glasses at Costco?

Yes, Costco Optical accepts HSA (Health Savings Account) cards for eligible vision purchases like prescription eyeglasses, contact lenses, and eye exams.

How to Use Your HSA at Costco Optical

  • In-Store: Pay directly at the Costco Optical counter using your HSA Visa or Mastercard debit card. Main warehouse checkout registers may not always process HSA cards correctly for specialty department items.
  • Online: Use your HSA card directly on Costco.com when purchasing eligible items like contact lenses.

How To Use Your FSA & HSA on AMAZON (Easy)

9 related questions found

What positions pay $30 an hour at Costco?

At Costco, hourly wages reach or exceed $30 an hour for top-scale regular store clerks and specialized or licensed roles after accumulating enough tenure.

Store Positions Reaching $30+ per Hour (Top-Scale)

Regular hourly employees reach this threshold by climbing the Costco Pay scale over several years of service. Top pay rates for these roles peak between $30.20 and $31.90 per hour:

  • Front-End Cashiers
  • Service Deli Clerks
  • Membership Clerks
  • Bakers
  • Tire Installers / Technicians

Specialized and Leadership Roles

Certain technical, security, or leadership positions scale up to or start near the $30 mark faster:

  • Loss Prevention: Ranges from $20.50 up to $30.90 per hour.
  • Customer Experience / Frontline Leadership: Starts or scales to at least $30.90 per hour.
  • Depot Truck Drivers: Scale up to $35.45 per hour.
  • Specialized Operations (IT support, logistics, inventory management): Reaches $30+ per hour depending on advanced technological duties.
  • Licensed Professionals (Hearing aid specialists, opticians, pharmacists): Licensed and specialized health positions range from $22 to over $60 an hour depending on credentials and specific regional demand.

Do Costco cashiers make $33 an hour?

Yes, top-scale Costco cashiers can make around $33 an hour ($32.90 to $33.90), but this rate is typically reached only after several years of full-time work.

Pay Structure and Progression

  • Starting Pay: New hires start at a lower hourly wage (usually ranging around $21 to $22 depending on the position and location), not the maximum rate.
  • Top-Out Pay: It takes roughly five years of consistent full-time hours to reach the top-tier hourly wage.
  • Viral Example: The $33 figure gained widespread attention following a Wall Street Journal article profiling a 40-year tenured cashier named Tony Barzar who earns $32.90 an hour.

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.

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.

What fitness equipment can I buy with HSA?

You can buy fitness and home gym equipment with your Health Savings Account (HSA) if you have a Letter of Medical Necessity (LMN) from a licensed healthcare provider.

Eligible Equipment Categories

With an LMN linking the gear to a diagnosed medical condition (such as hypertension, obesity, type 2 diabetes, or physical rehabilitation), you can purchase:

  • Cardio Machines: Treadmills, walking pads, stationary exercise bikes, ellipticals, and rowing machines.
  • Strength Training: Dumbbells, barbells, kettlebells, weight benches, resistance bands, and squat racks.
  • Recovery & Health Tech: Massage guns, foam rollers, and wearable fitness trackers (like WHOOP or Garmin).
  • Memberships: Gym memberships or fitness classes when prescribed for a specific health condition.

How to Buy

  1. Get a Letter of Medical Necessity: Your doctor must write an LMN that specifies your diagnosis, the required equipment category, and the treatment plan duration.
  2. Use Specialized Checkout Services: Platforms like Truemed partner with fitness brands (such as Peloton, Sunny Health & Fitness, PRx Performance, and Titan Fitness) to issue LMNs via a quick online health survey during checkout.
  3. Pay or Reimburse: Use your HSA debit card directly on participating sites, or pay out-of-pocket and submit your receipt and LMN to your HSA administrator for reimbursement.