17 Surprising Ways to Use an HSA or Other Tax-Free Health Account

HSAs, FSAs, and HRAs let you put tax-free dollars toward fitness, transportation, and home renovations. But to save the most money, you have to know how to use them.

Doctor checking a patient for leg pain

If you have health insurance, you might also qualify for a savings account that lets you avoid paying taxes. It’s a powerful financial tool that can significantly reduce the cost of doctor appointments, medication, and more. In some cases, it may also help you earn money.

Tax-free health accounts come in three varieties:

  • Health reimbursement accounts (HRAs)
    These are accounts your employer opens on your behalf. If you have an HRA, you’re getting free money: Your employer makes contributions, and you can use it on medical expenses (including many of the ones listed below).

    If you have an HRA, make sure you understand the terms. Depending on how your employer set it up, you may need to spend the money before the year ends. Other times, the balance will roll over.

  • Flexible spending accounts (FSAs)
    With FSAs, you and your employer can both make contributions. That allows you to save faster for a big medical event, such as a surgery. The catch is that the money that goes into your FSA must be used by the end of the year.

  • Health savings accounts (HSAs)
    HSAs provide the most flexibility. The money never expires, so you can spend it at any point in the future. That allows you to use an HSA as a long-term savings account. You pay no taxes as the money goes in or as you spend it. And the money that’s in your HSA can be invested and grow tax-free as well.

    HSAs are available only to people with high-deductible health plans. For 2022, a high deductible is defined as at least $1,400 for an individual or $2,800 for a family.

Financial experts agree that if you have one of these accounts, you should use it. But not everybody does. According to a 2020 JAMA study on HSAs, 1 in 3 adults with high-deductible health plans did not use their tax-free accounts. Among those who did, most hadn’t put any money into it in at least a year.

“We should all be looking for ways to save money on our taxes,” says Roy Ramthun, founder and president of HSA Consulting Services, which is based in Houston. And tax-advantaged health accounts are an easy way to do that.

Of course, you’ll be more motivated to use the account once you know exactly how to do it. So in addition to paying for prescription medication and doctor copays, here are some other ways to use that tax-free money.

1. Pay for treatments your insurance won’t cover

“One of the greatest things about an HSA is that it can often be used for things that your insurance does not cover,” Ramthun says. That goes for FSAs and HRAs too.

That means you may be able to use your tax-free money for acupuncture, chiropractic care, and other alternative treatments.

2. Pay for travel and lodging

Have a long drive to the doctor’s office? Use your HSA, FSA, or HRA to pay for the costs associated with travel to and from medical appointments. That includes gas, tolls, and parking fees.

Alternatively, you can spend those funds on public transportation, taxi fares, or even plane tickets. If you have to stay overnight near a hospital, you can put $50 toward a hotel room — or $100 if you’re traveling with a companion.

3. Stock up on cold and flu medicines

When a nasty cold strikes, you probably won’t have the energy to run to the store for over-the-counter essentials. But you can use your health account to stock up ahead of time on throat lozenges, cough syrup, nasal spray, decongestants, expectorants, and anything else you’ll need in your arsenal to fight colds or flu.

This is especially useful for people with an FSA or HRA who need to spend money before the year ends — which is right before flu season hits full stride.

4. Make health-related home improvements

Certain home improvement projects could be eligible for reimbursement through your health account, as long as their main purpose is to provide medical care to you or your dependents. This includes:

  • Constructing entrance or exit ramps
  • Widening doorways
  • Installing railings, handrails, or grab bars
  • Lowering cabinets
  • Installing porch lifts

If deemed medically necessary, you might even be able to use the tax-free funds to pay for bigger renovations, such as in-home elevators or swimming pools to treat medical conditions such as multiple sclerosis.

Typically, you’ll need a letter of medical necessity from your doctor for major projects such as these, Ramthun says. And for big expenses, you should consult with someone who specializes in tax-free health spending.

“Just because you get a letter from your doctor doesn’t mean you’ve got the golden ticket,” Ramthun says. If the Internal Revenue Service (IRS) determines that you spent money from your health account on a nonmedical expense, you’ll have to pay income tax on those withdrawals — plus a 20% penalty if you’re not 65 yet.

5. Reduce the cost of dental care

Whether or not you have dental insurance, you can use your tax-free health account to cover costs associated with dental care. “Pretty much anything that’s not cosmetic is eligible,” Ramthun says. That includes:

  • Braces
  • Dental reconstruction
  • Denture supplies, such as adhesives and cleansers
  • Tooth bonding
  • Artificial teeth
  • Veneers

6. Boost your vision

You can also use health account funds to pay for expenses related to eye care, even if you don’t have vision coverage. That can help you save money on:

  • Eye exams
  • Eyeglasses
  • Contact lenses
  • Eyeglasses repair kits
  • Cleansing cloths
  • Contact lens cases
  • Contact solution
  • Eye drops

7. Give your ears a tune-up

Hearing aids are generally not covered by medical insurance, but you can use your HSA, FSA, or HRA to buy them. And don’t forget the batteries—those are eligible for reimbursement too.

If your hearing aids ever break, you can also use the funds to cover any necessary repairs.

8. Build your retirement fund

This doesn’t apply to FSAs or HRAs. But if you have an HSA, you can use it to prepare for retirement.

If you can contribute more than you spend, the money will grow tax-free for years. And you’ll have it waiting for you when you need care the most. You can use the money in an HSA to make investments in stocks, bonds, and mutual funds, just like you would with an individual retirement account, Ramthun says.

The IRS reevaluates the contribution limits for HSAs each year. In 2022, you can contribute up to $3,650 to your individual HSA, or $7,300 if you have family coverage.

And if you’re 55 or older, you can tack on an extra $1,000 in catch-up contributions to your HSA. “Maybe you didn’t take that whole ‘planning for retirement’ thing seriously when you were younger,” Ramthun says. “The government allows you to contribute extra money as you get older. It’s like a second chance to save.”

Since there is no reimbursement deadline, you can potentially invest your HSA funds and pay yourself back on decades-old medical expenses — so long as they were incurred after you opened the account. Just make sure to keep your receipts in case the IRS comes knocking.

“I’ve had an HSA for 17 years, and I’ve never taken a reimbursement,” Ramthun says. “I’m planning to wait until I retire to reimburse myself.” In the meantime, he says, he’s investing those funds and letting them grow.

9. Enlist a service animal

People with vision or hearing impairments or other physical disabilities can use their health accounts to buy, train, and care for a service animal, such as a guide dogother companion animal.

And that goes beyond the cost of acquiring the furry helper. You can use your tax-free dollars to pay for food, grooming, and veterinary care. If it helps maintain the health of the animal, you can use your tax-free funds to buy it.

10. Defray the cost of childbirth

Childbirth is a pivotal event in a person’s life. It’s also very expensive. But your tax-free health account can cover direct hospital expenses racked up during childbirth. It can also be used to pay for many expenses accrued before and during pregnancy, such as pregnancy tests, prenatal vitamins, Lamaze classes, even in vitro fertilization.

11. Pay insurance premiums when you’re unemployed

If you have an HSA, this one is for you. Since the money never expires, you can take it with you if you leave your job or the health policy that came with it, Ramthun says. And then you can use it to pay your insurance premiums.

If your company offers COBRA continuation coverage, you can use your HSA to pay for that. If not — and if you’re currently receiving unemployment benefits — you can use the funds to pay for traditional health insurance premiums.

12. Knock out some of your Medicare premiums

Medicare presents another opportunity to use your HSA to pay for insurance premiums. “Medicare Part B, which pays mostly for your doctor bills, has a monthly premium that you can pay for with your HSA funds,” Ramthun says. “A lot of people have their Part D premium deducted from their Social Security check. But they could reimburse themselves for the amount they pay every month too.”

You can also pay your Medicare Advantage premium with HSA funds, but premiums for Medicare supplemental insurance policies are not eligible, Ramthun says.

13. Invest in healthy lungs

Trying to quit smoking? With the passage of the CARES Act in March 2020, your tax-free health account funds can be used to buy nicotine gum, patches, lozenges, or any other smoking-cessation products. You can also use the money to enroll in programs aimed at helping people kick the habit.

14. Supplement your yoga routine

Yoga is a wonderful way to boost mindfulness, relieve anxiety, and strengthen your body. And if your doctor prescribes it to treat a medical condition, such as arthritis, it becomes an eligible health-account expense.

15. Pick up a blood pressure monitor

Nearly half of U.S. adults have hypertension (high blood pressure), according to the American Heart Association. If you think you may be at risk, a home blood pressure monitor is one of the best ways to stay on top of your heart health.

If your health insurance policy doesn’t cover the cost of a monitor, you can use your tax-free health account funds to buy one.

16. Spend less on menstrual products

Use your HSA, FSA, or HRA to stock up on period essentials. Eligible items include:

  • Pads
  • Liners
  • Tampons
  • Menstrual cups
  • Period underwear
  • Medications, such as Midol, that help relieve menstrual pain, bloating, and cramps

17. Move your HSA to another bank

Again, this one applies specifically to HSAs. And while it’s not spending money, it could help you save faster.

Not all HSAs are created equal, says Ramthun. The banks that manage them charge fees to invest and manage your money, and those fees can vary significantly.

“One thing people don’t often realize, especially when they get their HSA through their employer, is they don’t have to leave their money in that HSA,” Ramthun says. “If you hear about a better deal somewhere else, you can move your money to another financial institution.”

You can even ask your employer to make deposits at the new bank. If they say no (which they probably will, he says), you can open a second account at whatever bank gives you a better deal and transfer the balance from your original HSA every few months.

Ramthun has just one word of caution: If your employer matches contributions to your HSA, make sure you keep that original account open so you’ll be able to access your money.

Healthcare is expensive, but knowing how to take advantage of these tax-free accounts could help you save thousands of dollars a year. And by making your health journey more affordable, they may also help you sleep better at night.


Additional sources

Eligible tax-free medical expenses: Internal Revenue Service
HSA enrollment stats: JAMA (2020). “Use of health savings accounts among US adults enrolled in high-deductible health plans”
Aquatic therapy for multiple sclerosis: Multiple Sclerosis and Related Disorders (2020). “The effect of aquatic physical therapy on patients with multiple sclerosis: A systematic review and meta-analysis”
HSA 2022 contribution limits: Internal Revenue Service
CARES Act: Congress.gov
Benefits of yoga: Harvard Medical School
Yoga for arthritis: Johns Hopkins Arthritis Center
Link between high blood pressure and midlife brain changes: American Heart Association