Any medical expense allowed under the HSA can be withdrawn anytime. The amount you take from the fund is non-taxable. But you have to be careful about what you use the fund for because any withdrawal from the HSA for purposes other than what is allowed becomes taxable aside from being slapped with a 20% penalty. That is why you have to know what medical expenses are allowed to be charged to your HSA according to IRS guidelines.
I have compiled the information provided by the IRS in their publications and literature. Generally speaking, all medical procedures and services, including all medical prescriptions are allowed. However, there are other medical expenses that are eligible such as:
· Expenses related to acupuncture treatments;
· Treatments related to alcoholism, which includes transportation expenses to and from AA meetings, if such meetings were advised by the doctor because they are necessary for treatment of excessive alcohol drinking;
· Non-surgical treatments of the nervous system or musculoskeletal system (those related to chiropractic care);
Eye examinations, eye surgery, or any procedure to correct visions problems, including eye glasses or contact lenses necessary for the treatment;
Treatment of auditory problems, including hearing aids and its peripherals like batteries;
Supply of oxygen;
Weight loss programs; however, this is allowed only when advised by the doctor because of diabetes or hypertension. It is advised to consult the IRS first in order to be updated with the limits and restrictions with this expense;
Lead-based paint removal for victims of lead poisoning;
Insulin bought over-the-counter, provided that the drug was prescribed by a physician.
As you withdraw from the HSA to pay for any qualified medical expense, you have to keep all records and documents as proofs of your expenses. These are important when filling up tax forms.
When in doubt about your medical expenses, it is always wise to consult with IRS literature before using your HSA funds. Make sure that you are reading the latest IRS publication.