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A: Medical expenses are the costs of diagnosis, cure, mitigation, treatment or prevention of disease, and the cost for treatments affecting any part or function of the body.  They include costs of equipment, supplies, and diagnostic devices needed for these purposes.  They also include dental expenses.  Medical care expenses must be primarily to alleviate or prevent a physical or mental defect or illness.  They do not include expenses that are merely beneficial to general health, such as vitamins or a vacation.   

The following information from the IRS offers a summary of some of the healthcare expenses that are eligible for reimbursement through your Health Savings Accounts (HSA). This list is not all-inclusive and examples and specific requirements are subject to change by the Internal Revenue Service.

For specific descriptions of what is covered under each of these areas, please see IRS Publication 502 Medical and Dental Expenses, available online under “Forms and Publications” at www.irs.gov or by calling 1-800-829-3676.  For tax advice, consult your tax advisor.   

• Acupuncture
• Alcoholism
• Ambulance
• Artificial Limb
• Artificial Teeth
• Autoette
• Bandages
• Breast Reconstruction Surgery
• Birth Control Pills
• Braille Books and Magazines
• Capital Expenses
• Chiropractor
• Christian Science Practitioner
• COBRA
• Contact Lenses
• Crutches
• Dental Treatment
• Diagnostic Devices
• Disabled Dependent Care Expenses
• Drug Addiction
• Drugs (Prescription and some over the counter)
• Eyeglasses
• Eye Surgery
• Fertility Enhancement
• Guide Dog
• Hearing Aids
• Home Care
• Home Improvements
• Hospital Services
• Laboratory Fees
• Lead-Based Paint Removal
• Learning Disability
• Legal Fees
• Lodging
• Long Term Care
• Medical Conferences
• Medical Services
• Medicines
• Nursing Home
• Nursing Services
• Operations
• Optometrist
• Organ Donors
• Osteopath
• Oxygen
• Prosthesis
• Psychiatric Care
• Psychoanalysis
• Psychologist
• Special Education
• Sterilization
• Surgery
• Therapy
• Transplants
• Transportation
• Vaxectomy
• X-ray

As a reminder, the individual is solely responsible for determining whether HSA distributions are to pay for or reimburse qualified medical expenses and must maintain medical expense records to show that distributions have been made exclusively for qualified medical expenses.  

Report all contributions to your HSA on Form 8889, Health Savings Accounts (HSAs), and file it with your Form 1040.

You must file Form 8889 with your Form 1040 if you (or your spouse, if married filing a joint return) had any activity in your HSA during the year. You must file the form even if only your employer or your spouse’s employer made contributions to the HSA.

You should receive Form 5498-SA, HSA information, from the trustee showing the amount contributed to your HSA during the year. Your employer’s contributions also will be shown in box 12 of Form W-2, Wage and Tax Statement, with code W.  Follow the instructions for Form 8889.  Report your HSA deduction on Form 1040, line 25.

A:  There are some family plans that have deductibles for both the family as a whole and for individual family members. Under these plans, if you meet the individual deductible for one family member, you do not have to meet the higher annual deductible amount for the family. If either the deductible for the family as a whole or the deductible for an individual family member is below the minimum annual deductible for family coverage, the plan does not qualify as an HDHP.

Example.  You have family health insurance coverage in 2006. The annual deductible for the family plan is $3,500. This plan also has an individual deductible of $1,500 for each family member. The plan does not qualify as an HDHP because the deductible for an individual family member is below the minimum annual deductible ($2,100) for family coverage.