If you have a health savings account (HSA), you can use it to buy prescription medications.
Also, you can use your HSA to buy nonprescription or over-the-counter (OTC) medications, like Tylenol, Tums, Maalox, and Zyrtec. These drugs became available following the introduction of the Coronavirus Aid, Relief, and Economic Security Act or the CARES Act, which also approves the use of HSA funds for menstrual care products.
Many health insurance plans don’t typically cover OTC medications or menstrual care products.
| In this article, we may use some terms to help you when selecting the best insurance plan: Deductible: This is an annual amount you must spend out of pocket within a certain time period before an insurer starts to cover costs. Coinsurance: This is a percentage of a service cost that you’ll need to cover yourself. Copayment: This is a fixed dollar amount that you pay when receiving certain services, including filling prescriptions. |
What is an HSA?
An HSA is a financial account you can set up if you have a high deductible health plan (HDHP) and you can use it for eligible medical expenses. They’re offered through banks and insurance companies, although they are unavailable to those enrolled in Medicare plans.
You can add pretax money to your HSA. For example, if you make $28,500 per year and put $2,500 in your HSA, you will be taxed as though you make $26,000 instead.
Additionally, your HSA deposits can earn tax-free interest, and your HSA contributions can carry over from year to year, even if you retire or change jobs.
You can only set up and make deposits to an HSA if you have an HDHP.
For 2024, the Inland Revenue Service (IRS) defines an HDHP as a plan with a deductible of at least $1,600 for an individual or $3,200 for a family and total annual out-of-pocket expenses of $8,050 or less for an individual or $16,100 for a family.
Out-of-pocket expenses may include copayments, coinsurance, and deductibles but do not include premium costs.
The IRS also confirmed that the 2024 contribution limit will increase to $4,150 for an individual and $8,300 for a family.
Using your HSA for prescription drugs
When a doctor prescribes you a medication, they’ll either call the prescription into your preferred pharmacy or give you a written prescription to take to a pharmacy.
The pharmacy will fill your prescription, and you can use prescription discount cards, like the Optum Perks Discount Card, to ensure the best price for your medications. You can use the HSA to pay for your items, and many HSAs will come with a debit card.
If you don’t have an HSA debit card or choose not to use it, you can pay for your items as you usually would, but remember to save the receipt as a record for your self-reimbursement from your HSA.
Health plan prescription coverage
If you have coverage for prescription medications through your health insurance plan, you may find that it’s more cost effective to use your insurance.
You can check your plan’s drug list, also called a formulary, to see if the drugs a doctor prescribes are included in your plan. If they are included, you may only have to pay a copayment for your medications.
Formularies are typically split into different tiers, with the most common or lower-cost medications in lower tiers. It’s important to check your drug list with your insurer directly, as they can differ from plan to plan and insurer to insurer.
Also, if you use your insurance, eligible costs will count toward your deductible. This may not be possible when using a discount card or coupon, but you can check your plan rules with your plan provider.
If you need help covering the cost of medications, the free Optum Perks Discount Card could help you save up to 80% on prescription drugs. Follow the links on drug names for savings on that medication, or search for a specific drug here.
