Can I use my HSA to purchase over-the-counter medications?

Q: Can I use my HSA to purchase over-the-counter medications?

A: Yes, you can. The rules on this have changed over time.

As of 2011, the ACA prohibited the purchase of over-the-counter medications with health savings account (HSA) funds, unless a doctor wrote a prescription for them. But Section 4402 of the Coronavirus Aid, Relief, and Economic Security (CARES) Act changed that. 

The law, which was enacted in March 2020, eliminated the sentence at the end of Section 223(d)(2) of the Internal Revenue Code of 1986 that had previously prohibited the purchase of non-prescription over-the-counter medications with HSA money.

(The law used to say that qualified medical expenses “shall include an amount paid for medicine or a drug only if such medicine or drug is a prescribed drug (determined without regard to whether such drug is available without a prescription) or is insulin.” That provision was eliminated under the CARES Act.)

Section 4402 of the CARES Act also changed the rules to allow menstrual products to be purchased with HSA funds.

Both of these changes are permanent and were retroactively effective on January 1, 2020.