What is a Letter of Medical Necessity?

Understand how the HSA reimbursement process works. Plus, learn how qualifying patients can get a Letter of Medical Necessity online with a $15 consultation.
Young female office worker with raised arms and closed eyes sitting at desk with computer while working in home office

Key Points

  1. A Letter of Medical Necessity is a document explaining why an expense prevents or treats a medical condition.
  2. A Health Savings Account lets you reserve pre-tax money to pay for medical expenses. Some expenses require a Letter of Medical Necessity to qualify them for HSA reimbursement.
  3. Dr. B’s $15 fitness consultation services can help qualifying patients get a Letter of Medical Necessity online.

If you have a Health Savings Account (HSA), you're already a pro at nurturing your physical and financial health. But maybe an item has been surprisingly rejected because it’s not an automatically qualified expense. If so, a Letter of Medical Necessity (LMN) might be your answer.

And if you’re confused about the tax-saving buzz about HSAs, we’ve got your back there, too.

In this article, we break down the details about HSAs, qualified medical expenses and Letters of Medical Necessity.

What is a Health Savings Account?

A Health Savings Account is one kind of tax-advantaged savings account.

With an HSA, you can deposit a portion of your income into the account and use those funds to pay for medical expenses. At the end of the year, you’ll report the contributed amount on your federal tax return. That amount will be reduced from your taxable income—saving you money!

HSAs come with other tax advantages, too.

You won’t have to pay income tax on any funds you use to pay for medical expenses. You also won’t pay tax on interest incurred in the account. And once you’ve hit retirement age, you can withdraw money from your HSA for any reason. (You will have to pay tax on funds you use for non-medical purposes, though.)

Who is eligible for HSA? (And how do you open an HSA?)

HSAs are available to those with a high-deductible health plan (HDHP).

To qualify, your health plan must:

  1. Have a deductible of at least $1,600 for a single person and $3.200 for a family.
  2. Have out-of-pocket maximum expenses that do not exceed $8,050 for a single person or $16,000 for a family.
  3. Only cover preventative services before you meet your deductible.

That third point is the stickiest—and why most health plans don’t qualify for HSAs. It means your plan can’t pay for any portion of your doctor visits or medications unrelated to preventative care until you’ve met your deductible.

You also can’t contribute to an HSA if you have Medicare coverage.

If you get your health insurance through your employer, they may offer a Flexible Spending Account (FSA). Like an HSA, you can deposit pre-tax funds into an FSA and use them to pay for qualified medical expenses. If you get your insurance through your employer, ask your HR department if an FSA or HSA provider is in place.

Otherwise, qualifying individuals can open an HSA through financial institutions like Lively, Health Equity and Fidelity. Major banks like Bank of America, Wells Fargo and Chase also offer HSA accounts.

What are common HSA-eligible expenses?

Generally speaking, HSA funds can be used to pay for tax-deductible medical expenses. Most people use their HSA funds for doctor visit copays, prescription drugs, eye care, and dental treatment.

Other qualified medical expenses include:

  • Covid-19 prevention tools (disposable face masks and hand sanitizer)
  • Over-the-counter medications (acne, allergies, pain reduction, etc.)
  • In-patient alcohol and addiction services
  • Braces and mobility devices (crutches, slings, arthritis gloves, etc.)
  • Fertility + reproductive care (birth control, pregnancy tests, vasectomies and fertility procedures)
  • Cancer wigs and breast reconstruction surgery
  • Acupuncture, chiropractic care and similar services
  • Home improvement related to medical conditions or disability
  • Weight loss programs (for conditions like obesity, heart disease or hypertension)
  • Travel for medical care (including gas, tolls and parking)
  • Psychiatry and therapy sessions

How do you use an HSA to pay for medical expenses?

Depending on your HSA institution, you can pay for medical expenses with HSA funds in two ways:

  1. Pay with your HSA card. Most institutions provide an HSA debit card you can use directly at health providers like pharmacies and doctors' offices.
  2. Submit receipts for reimbursement. When you pay for an expense somewhere that doesn’t accept your HSA card, you’ll submit the receipt to your HSA administrator. Once approved, they’ll transfer the amount from your HSA account to your designated checking or other account.

What is a Letter of Medical Necessity—and when do I need one?

HSA withdrawal rules specify what medical expenses can automatically be paid with HSA funds. Copays, eye care, dental care, prescriptions, common over-the-counter medications, and many other items don’t require documentation.

But if an item can be purchased for non-medical use, you need a Letter of Medical Necessity confirming that it’s a legit medical expense. And the letter must come from a licensed health provider.

The letter must include:

  • Your provider’s name, qualifications and signature
  • An explanation of your condition
  • How the purchase helps prevent or treat your condition
  • The period the treatment is necessary (if unspecified, the letter is valid for one year)

Medical expenses that require a Letter of Medical Necessity include:

  • Air conditioners, filters or purifiers
  • Alopecia treatment
  • Breast implant or reduction
  • House or car modifications
  • Colonics, Chinese herb practitioners, dietitians, doulas and other “alternative” treatments and practitioners
  • Dermatology treatments like dandruff shampoos
  • Egg donor fees, storage fees and recipient fees
  • Fitness trackers, fitness classes, physical trainers and gym memberships

Banner advertising Dr. B's services for letter of medical necessity for fitness

Can I get a Letter of Medical Necessity Online?

Yes! Many people who exercise to prevent or treat a medical condition don’t know they can save up to 40% of their fitness fees using their HSA funds. To help, Dr. B is making it more convenient for qualifying patients to get a Letter of Medical Necessity online!

Just start a $15 online fitness consultation. Use our chat-like platform to answer questions about your health history and current symptoms. Once finished, a licensed provider will review your information within three working hours.

If you qualify, they’ll send your Letter of Medical Necessity right to your inbox. The email will include details about how to submit the letter and your fitness receipts for HSA reimbursement.

The Dr. B team is always here to answer any questions you might have about strengthening your financial health. Learn more about how you can use your FSA/HSA for gym membership, personal training, and fitness class costs, or get started today!

Sources: Health Savings Account (HSA). HSA-qualified medical expenses (QME).

Internal Revenue Service. (2023). Publication 969 (2023). Health savings accounts and other tax-favored health plans.

Internal Revenue Service. (2023). Publication 502. Medical and dental expenses.

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