HSA funds can be used tax-free for qualified medical expenses as defined by the IRS in 26 U.S. Code § 213(d). This includes expenses for diagnosis, treatment, and prevention of physical or mental illness, injury, or disability. Common qualified expenses are deductibles, copays, prescriptions, dental and vision care, and some long-term care costs. Non-qualified expenses are subject to income tax and a 20% penalty (unless over age 65). It’s important to keep receipts and records for all HSA withdrawals.
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