Why
Since 2020, HSA money can pay for over-the-counter drugs without a prescription. The FDA regulates products that claim Broad Spectrum SPF protection as over-the-counter sunscreen drugs, and some HSA administrators and retailers treat them as eligible for that reason.
FDA drug status doesn't settle it on its own. Fluoride toothpaste is also an over-the-counter drug, and the IRS still calls toothpaste a personal expense. Sunscreen's better argument is that it's used to prevent a disease.
Only Broad Spectrum sunscreens with SPF 15 or higher may claim to reduce the risk of skin cancer. Anything less can only claim to help prevent sunburn, so it's a weaker case.
Moisturizer or makeup with SPF is weaker still. The FDA's sunscreen rules reach those products, but they're also everyday cosmetics, and the IRS doesn't allow items ordinarily used for personal purposes unless they're used primarily to prevent or treat an illness.
What to keep
- An itemized receipt that names the product.
- A photo of the label showing Broad Spectrum and the SPF, since receipts often abbreviate.
Watch out for
- Benefits companies don't all agree on sunscreen, so a store's "HSA eligible" tag isn't an IRS answer.
- After-sun lotion and tanning oil don't have this argument.
If you plan to reimburse yourself later
IRS Notice 2004-50, Q&A 39, sets no deadline, as long as the expense came after your HSA was established and your records show it wasn't paid by another source or deducted on a tax return. See what records the IRS expects and how long to keep them.