Q: Can a health savings account (HSA) reimburse costs for abortion-related expenses?
A: HSAs can be used for medical expenses that are described in Internal Revenue Code Section 213(d). However, while the IRS definition includes travel for medical care, it is limited to only some travel expenses. For example, amounts for lodging are reimbursable on a tax-free basis only up to $50 per night per individual. Lodging for a person traveling with the individual receiving medical care that is either an adult with a minor or a licensed medical caregiver would also be excluded, bringing the total up to $100 per night. However, it is unlikely the lodging exception will apply to most abortion travel because the medical care must be provided by a physician in a licensed hospital or in a medical care facility that is related to, or the equivalent of, a licensed hospital. Transportation expenses may also be reimbursed, although the mileage rate is currently only about a third of what is allowed for business travel. Finally, meals and childcare expenses may not be reimbursed from the HSA.
Q: Can a health savings account (HSA), health flexible spending arrangement (health FSA) or health reimbursement arrangement (HRA) reimburse expenses incurred for OTC contraception obtained without a prescription?
A: Yes. According to Departmental guidance, an HSA, health FSA, or HRA can reimburse an individual for the cost (or portion of the cost) incurred for OTC contraception to the extent that cost is not paid or reimbursed by another plan or coverage.
Under the Code, a distribution from an individual’s HSA is not included in the individual’s gross income if it is used to pay for medical expenses incurred by an individual (or the individual’s spouse or dependent) “but only to the extent such amounts are not compensated for by insurance or otherwise.” Therefore, expenses incurred for contraception paid or reimbursed by a plan or issuer are not qualified medical expenses for purposes of an HSA. If the entire cost of contraception is not paid or reimbursed by the plan or issuer, qualified medical expenses include the portion of the cost not paid or reimbursed by the plan or issuer.
Plans and issuers must cover the cost of certain OTC contraceptives when prescribed for an individual by their health care provider. Plans and issuers that will cover costs of OTC contraceptives without a prescription should advise individuals not to seek reimbursement from an HSA, health FSA, or HRA for the cost (or the portion of the cost) of contraception paid or reimbursed by the plan or issuer, and not to use an HSA, health FSA, or HRA (including any related debit card) to purchase contraception for which the individual intends to seek reimbursement from the plan or issuer.