CBD has become increasingly popular in the last few years. But the legality surrounding CBD is still undefined by the IRS, which has implications for FSA eligibility. 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)?
Can I Buy CBD Oil With My Hsa Account
With the rise of natural and organic remedies and the change in public perception surrounding cannabis, it’s no surprise that CBD has become increasingly popular in the last few years. You’ll see its benefits touted by everyone from professional athletes to the arthritic elderly, promoting it as a milder alternative to prescription pain medication.
But the legality surrounding CBD is still undefined by the IRS, which has implications for FSA eligibility. Regardless, here’s what you might want to know about CBD (after speaking with your doctor, of course).
What is CBD?
CBD or cannabidiol is extracted from a specific variety of cannabis, usually hemp. Hemp plants contain little to no traces of THC, the psychoactive element found in marijuana.
A common misconception is that since CBD is related to marijuana, it will get you “high.” But because most forms of commercial CBD have no THC in them, you won’t feel that traditional sense of high after ingestion.
CBD is technically legal in all 50 states as long it’s derived from hemp. 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.
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 medication, 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.
CBD usually comes in a few different forms, including oil, tablets and creams. Many veterinarians even sell CBD products for animal anxiety.
Where to find CBD
You can find CBD products anywhere from gas stations to health food stores. Unfortunately, regulation of CBD products can be lax in many states, leading to questions about the quality and purity of individual products.
To find quality CBD products, some people suggest buying products manufactured in Colorado, where regulation is stricter. You can also look up a CBD product’s certificate of authenticity to make sure it’s been properly tested.
(Again, we’re not medical professionals – always speak with your doctor before making any changes to your medical routine.)
So, can you use an FSA for CBD?
CBD products are probably not considered HSA- or FSA-eligible, though there hasn’t been any formal guidance from the IRS on the matter. This is similar to medical marijuana, which is also not HSA or FSA-eligible even if you’re taking it for a diagnosed disorder or to reduce the effects of chemotherapy.
While medical marijuana is legal in 33 states and the District of Columbia, including the 10 states where both recreational and medical marijuana are legal, it is not yet federally legal, and therefore not eligible for reimbursement. It appears that CBD products — even if they’re not derived from marijuana — are being categorized similarly.
As of today, if you use your HSA for medical marijuana or CBD, you’ll pay income tax and an extra 20% penalty on any forbidden distributions from your account. If you use an FSA, you’ll likely be asked to pay back your account. Because of this, remember to always buy CBD products with your regular debit or credit card to avoid any confusion and penalties.
From FSA basics to the most specific account details, in our Asked and Answered column, our team gets to the bottom of your most-pressing flex spending questions. It appears on Wednesdays, exclusively on the FSAstore.com Learning Center. And for the latest info about your health and financial wellness, be sure to follow us on Facebook, Instagram and Twitter.
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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