HSA Store Can you pay for CBD oil with an HSA? Are you wondering if you can pay for CBD oil with a health savings account (HSA), flexible spending account (FSA), or health reimbursement arrangement (HRA)?
CBD: HSA Eligibility
CBD (Cannabidiol) oil and other CBD products are not eligible for reimbursement with a flexible spending account (FSA), health savings account (HSA), health reimbursement arrangement (HRA), limited-purpose flexible spending account (LPFSA) or a dependent care flexible spending account (DCFSA).
What is CBD oil and CBD products?
CBD, which stands for cannabidiol, is the second-most prevalent of the active ingredients behind THC, the psychoactive element found in marijuana. While CBD is an essential ingredient for those who utilize medical marijuana, CBD oil and other products are typically derived from hemp plants. Hemp (a cousin of the marijuana plant) contains little to no traces of THC, and CBD products are typically extracted by steeping the stems, seeds and leaves in alcohol or oil. (Harvard Health Publishing)
CBD is technically legal in all 50 states as long it’s derived from hemp. Hemp was removed from the Controlled Substances Act in late 2018, which ensures that it will no longer be treated as an illegal substance under federal law (FDA). But CBD products that are derived from marijuana re more highly-regulated at the state level. THC-derived CBD is legal in the following states: Alabama, Georgia, Indiana, Iowa, Kansas, Kentucky, Mississippi, North Carolina, South Carolina, Tennessee, Texas, Virginia, Wisconsin and Wyoming. (NORML)
Of course, there are experts with more details on the subject. The National Organization for the Reform of Marijuana Laws (NORML) has more information on what CBD products are legal in your state.
What is CBD used for?
Proponents of CBD claim its benefits include reduced anxiety, inflammation, arthritis and overall pain relief. Unlike prescription medications, there are few adverse side effects from CBD. Patients generally cannot become addicted to CBD, which can make it preferable to traditional pain pills. In 2018, the FDA approved a CBD-based drug to treat seizures for people with a rare type of epilepsy (FDA).
CBD usually comes in a few different forms, including oil, tablets and creams. Many veterinarians even sell CBD products for animal anxiety.
Is CBD FSA-eligible?
The IRS has yet to issue guidance on the eligibility status of CBD oil and products, so they are ineligible for purchase with FSA, HSA, HRA, LPFSA and DCFSA funds at this time.
Can you pay for CBD oil with an HSA?
Are you wondering if you can pay for CBD oil with a health savings account (HSA), flexible spending account (FSA), or health reimbursement arrangement (HRA)? You may also be wondering if this item is eligible or ineligible for reimbursement with your HSA, FSA, or HRA.
No, unfortunately you can’t use your HSA, FSA, or HRA to pay for CBD oil. In fact, if you do pay for CBD oil with one of those accounts, you may be subject to a penalty.
HSA fast facts
- Health savings accounts (HSAs) were created as part of the Medicare Prescription Drug, Improvement, and Modernization Act, or MMA, signed into law by President George W. Bush on December 8, 2003. The MMA was the largest overhaul to Medicare in the program’s history.
- HSAs are only available as part of a high-deductible health insurance plan (HDHP).
- As part of the 2020 CARES Act, over-the-counter medications and menstrual care products became eligible for purchase with an HSA.
- Contributions to an HSA can be made by an employer and/or employee on a pre-tax basis. You can find current and historical HSA contribution limits on this site.
- Funds in a health savings account can be invested in a similar way as other retirement accounts and are a rare example of an account that’s triple tax advantaged. That is, funds are contributed pre-tax, can be withdrawn for eligible medical expenses without taxation, and if you invest the funds within your HSA the earnings or interest are tax free. There are also many other benefits of HSAs that you may not know about.
- Funds can be withdrawn at any time for any reason, but funds withdrawn for non-approved medical expenses before the age of 65 are subject to income taxes and an additional penalty.
- You can no longer contribute to an HSA once you’re enrolled in Medicare.
Explore HSA eligibility for other products and services
Common HSA providers
What about FSA and HRA eligibility?
The same HSA eligibility status for CBD oil applies to flexible spending accounts (FSAs) and health reimbursement arrangements (HRAs) as well.
Coming up with accurate eligibility status for the list of HSA eligible expenses can be a challenge at times. The IRS only provides a partial list of eligible expenses, so consumers and even insurance companies are left to wonder exactly what products are eligible.
To help illustrate this point, I had a visitor email me to ask if regenerative medicine such as platelet rich plasma (PRP) and stem cell treatments are HSA eligible. I did extensive research and the answer pointed toward “probably not but check with your provider to see if they’ll cover it.” So I suggested that he consult them for guidance. His response was that he did and even they didn’t know!
In a case like that, I would suggest getting a definitive answer in writing from your provider. If you can’t get one, the safe choice is to assume it’s not eligible and not expense it.
There are also cases where one source says an expense is eligible and another says it’s not. In those cases I do my best to research the expense further and come up with an answer that seems most likely for the greatest number of providers.
At any rate, these are the primary sources I use for expense verification. Keep in mind this is not an exhaustive list, and I will frequently check product manufacturer websites for eligibility statuses, as they often will have done their own due diligence if they suspect people may want to use their HSA or FSA to pay for their products and they fall into the uncertain category.
– IRS – IRS – U.S. Congress – Wikipedia
This page is intended to be an educational reference only. Please check with your HSA administrator or health insurance provider to confirm if you can pay for CBD oil with your HSA card before making any purchases.
A good rule of thumb is that if your doctor diagnosed you with a specific medical condition or ordered a treatment, product, or prescription specifically for you, your health savings account should cover it. Sometimes your HSA will even cover items that it normally wouldn’t if you have a letter of medical necessity signed by your doctor. Again, you should check with your HSA administrator before any purchase if you have any questions about an item being eligible or ineligible.
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