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Nonqualified medical expenses

Nonqualified medical expenses are expenses not covered by your health plan and/or not specified by the IRS as qualified. Distributions for nonqualified expenses will be taxed as part of your gross income and will incur a 10% penalty.1 After age 65, the 10% penalty is dropped, though the distribution is still treated as taxable income. According to IRS, the following expenses are not qualified HSA expenses: 1

Generally, health insurance premiums are not qualified medical expenses, except for the following:

If you are over age 65 you may use HSA funds to pay the following premiums:

Note: Medicare Supplemental policy premiums are not qualified medical expenses.


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®, SM Marks of the Blue Cross and Blue Shield Association. SM1 Mark of Blue Cross and Blue Shield of North Carolina. SM2 Mark of ACS Human Resources and Investor Solutions, Inc.

1 Ineligible expenses are defined by IRS Revenue Code Section 213 (d).