Can I use my Health Savings Account for Spa Services?
Health and wellness includes making savvy financial decisions. Many spa guests often wonder if they can use their Health Savings Account to pay for services. The short answer is, unless it is prescribed by a doctor, no. If you have had surgery or do have a medical condition where massage can help, talk to your doctor about writing a prescription and then you can reimburse yourself out of your HSA. Even if you don’t have a medical condition, as part of your overall health and wellness it’s worth learning more about HSAs to see if this is something you could add to your financial wellness portfolio.
What is an HSA?
A health savings account is typically used if you have a lower premium, but high deductible health insurance plan. It’s a way to take pre-tax money and put it into an account that can earn interest and grow tax free and can be used anytime into your future for qualified health related expenses. You can use these pre-tax dollars to pay for health expenses not covered by your insurance, including what is needed to meet your deductible. When you reach age 65, there is no longer a penalty to withdraw money for other expenses, but you will pay taxes when you withdraw the money for non-medical services (much like an IRA). You can no longer contribute to an HSA once you’re enrolled din Medicare, but you can continue to use the funds for qualified expenses (including Medicare premiums) .
How do you set it up?
If you are employed, talk to your Human Resources Administrator or Health Care Plan Administrator and they will likely be able to help you set up an HSA. Many health plans will provide you with a debit card you can use to make qualified purchases. But, you can also reimburse yourself so long as you have documentation from your physician. If you are self-employed, check with your health insurance agent or provider to assist you in setting up the account. Once it’s set up, you want to make sure you take the proper deductions on your tax return. In 2021, the maximum contribution is $3,600, but it jumps to $7,200 if it covers an additional family member. Once you reach 55, you can contribute an additional $1,000 per year. This is explained in IRS Publication 969 Publication 969 (2019), Health Savings Accounts and Other Tax-Favored Health Plans | Internal Revenue Service (irs.gov). If you work with an accountant to file your taxes, discuss how this impacts your overall tax strategy. If you are doing taxes yourself, be sure you make the contribution and take the deduction. .
Can I use it for massage?
Simply put, you can use it for massage if massage is prescribed by a doctor for a medical condition. Unfortunately, despite the reality that massage and self-care are critically important to staying healthy, the IRS currently doesn’t allow you to use pre-tax money for preventative care. If you like reading the details, here is the IRS document detailing what can and can’t be reimbursed. 2020 Publication 502 (irs.gov)
You can use your HSA, though, for things like glasses, contacts, vision correction surgery , body scans and even weight loss programs if it is prescribed by a doctor. They key to properly using your HSA is to ensure your doctor documents the recommendation in the form of a prescription. Keep your paperwork so that if you are ever audited, you can support your use of the HSA funds.
What about other spa related services?
Unfortunately, no. Facials, nail services, and style blow outs do a lot for making us look and feel great, but the US government doesn’t allow us to pay for that with pre-tax money. Alas, we have to invest in ourselves with money we make after we pay taxes!