Can Your HSA Cover Foreign Medical Expenses?

You can use an HSA for foreign medical expenses, and the withdrawal stays tax-free as long as the care meets the same IRS definition of a qualified medical expense that applies in the United States.¹ What changes abroad is the paperwork: you need an itemized receipt, a currency conversion tied to the payment date, and a certified English translation if the receipt is in another language. Living overseas long-term can also affect whether you can keep contributing, which is a separate question from spending.

Which Foreign Medical Care Qualifies

The IRS defines qualified medical expenses by what the service or product is, not where you received it. Amounts paid for the diagnosis, treatment, or prevention of disease, or for care affecting any part or function of the body, are eligible.¹ A doctor visit in Tokyo, an emergency room stay in Berlin, or a dental filling in Mexico City qualifies the same way it would at home. So do surgeries, hospital stays, vision care, mental health services, and prescription medications.

Over-the-counter drugs and menstrual care products qualify without a prescription. The CARES Act permanently removed the prescription requirement for OTC medicines like pain relievers and cold medication, retroactive to January 1, 2020.² Buying ibuprofen at a pharmacy in Barcelona counts.

One rule catches people with foreign prescriptions. You can only use HSA funds for a drug purchased abroad if that drug is legal in both the foreign country and the United States.¹ You also cannot buy prescription drugs in another country and import them back to the U.S. for use here.

What Doesn’t Qualify Abroad

The IRS draws the same lines abroad that it draws at home, plus a few that only matter across borders.

Any operation, treatment, or controlled substance that violates federal law is excluded, even if it’s legal where you received it. Cannabis-based treatments are a common example, since cannabis remains illegal under federal law.¹
Cosmetic surgery that doesn’t treat a medical condition or disfigurement from disease, injury, or a congenital abnormality is not qualified. Traveling to South Korea for an elective facelift doesn’t become eligible just because the surgery happened overseas.
Vitamins, supplements, and gym memberships don’t qualify unless a doctor has prescribed them for a specific diagnosed condition.
You generally cannot use HSA funds to pay health insurance premiums. Foreign travel insurance, evacuation insurance, and international health plans fall outside the narrow premium exceptions (COBRA, coverage while receiving unemployment, Medicare after 65, and qualified long-term care).³

The double-benefit rule applies abroad, too. You cannot reimburse a foreign medical expense from your HSA and also claim it as an itemized deduction on Schedule A. Pick one.¹

Travel and Lodging Tied to Foreign Care

Getting to a foreign provider can itself be an HSA-eligible expense. Bus, taxi, train, and plane fares qualify as long as the trip is primarily for medical care.¹ What doesn’t count: traveling to a foreign city primarily for vacation with a medical appointment tacked on, or travel for general health improvement.

Lodging away from home for medical care can qualify up to $50 per person per night, but the conditions are strict. The care must be provided by a doctor at a licensed hospital or equivalent facility, the lodging must be essential to the care, and the trip cannot have a significant element of personal recreation.¹ A companion traveling with the patient is also eligible, so a parent traveling with a child could claim up to $100 per night. Meals never count.

How to Pay a Foreign Provider

Most HSA debit cards work at foreign healthcare providers that accept the card’s payment network, but practical problems come up more often than you’d expect. Many foreign clinics, pharmacies, and hospitals don’t use the merchant category codes HSA custodians look for when auto-approving transactions. When the code doesn’t match, the charge may be declined or flagged for manual review even though the underlying expense qualifies.

Foreign transaction fees are another issue. HSA custodians commonly charge a 1–3% conversion or association markup on overseas card transactions. Those fees are not qualified medical expenses; the IRS treats them as finance charges, and you cannot reimburse yourself for them tax-free.

Paying the foreign provider out of pocket with a personal credit card or cash and then reimbursing yourself from the HSA later is often simpler. There is no deadline for HSA reimbursement as long as the expense was incurred after your HSA was established. You can pay abroad in June and withdraw from the HSA in December, or years later. Keep the receipt and conversion documentation regardless of when you take the reimbursement.

Converting Foreign Currency

Every HSA expense has to end up recorded in U.S. dollars. Use the exchange rate that was in effect on the date you actually paid the provider.⁴ If you paid a Thai hospital on March 15, use the March 15 rate, even if you don’t take the distribution until months later.

Use a publicly verifiable source: your bank’s posted rate for that date, the exchange rate shown on your credit card statement, or the Treasury Department’s daily rates. Print or save a screenshot showing the rate and the date. Write the conversion as a simple calculation: amount in foreign currency, times the rate on the payment date, equals the USD amount. Keep it with the receipt.

Documentation and What Happens If You Don’t Keep It

Foreign HSA claims need more paperwork than domestic ones, and this is where most people cut corners. The IRS expects records that prove three things: what the medical expense was, how much it cost in U.S. dollars, and that it qualifies.

Get a fully itemized receipt from the foreign provider at the time of payment. The receipt should show the services provided, the date of service, the amount charged, and the patient’s name. A credit card slip or bank statement showing you paid a hospital isn’t enough, because it doesn’t describe what the payment was for.

If the receipt is in a language other than English, get a certified translation. IRS guidance directs taxpayers to provide certified translations of foreign-language documents.⁵ Certified means the translator signs a statement attesting the translation is complete and accurate. Professional medical translation runs roughly $0.07 to $0.40 per word depending on language and urgency, and a single receipt rarely runs more than a few hundred words. The translation cost itself is not an HSA-qualified expense.

Keep the original foreign receipt, the certified English translation, and the currency conversion calculation for at least three years from the date you file the tax return covering the distribution.⁶

If you can’t produce this documentation during an audit, the IRS can reclassify the distribution as non-qualified. That means ordinary income tax on the amount, plus a 20% additional tax if you’re under 65, not disabled, and still living.³ On a $3,000 foreign hospital bill, the penalty alone is $600, before income tax. The paperwork is worth the effort.

Can You Still Contribute While Living Abroad?

Spending existing HSA funds abroad is one question. Continuing to put money in while overseas is a separate one, and expats trip over it often.

Contribution eligibility hinges on being covered under a qualifying High Deductible Health Plan on the first day of each month you want to contribute, with no disqualifying other coverage and no Medicare enrollment.² A common misconception is that claiming the Foreign Earned Income Exclusion on Form 2555 automatically disqualifies you. It doesn’t; the statute keys off HDHP coverage, not the FEIE.

The real problems are practical. Most U.S. employer-sponsored HDHPs don’t cover employees living abroad long-term, and once you drop off the plan, you lose eligibility for every month you’re uncovered. Enrolling in a national health system or buying a local policy that isn’t an HDHP counts as disqualifying other coverage, and many countries require residents to carry local insurance. And even if you keep a U.S. HDHP, the HSA deduction can only offset income that isn’t already excluded. If the FEIE zeroes out your earned income, the upfront tax break has nothing to bite on.

If you lose eligibility partway through the year, you have to prorate. Divide the annual limit by 12 and multiply by the number of months you were covered under an HDHP on the first of the month. Anything above that is an excess contribution, subject to a 6% excise tax for every year it remains in the account.⁷ You can avoid the penalty by withdrawing the excess (plus any earnings) before the tax filing deadline for that year.

None of this affects withdrawals. Even during months when you can’t contribute, you can still pull existing HSA funds tax-free for qualified medical expenses anywhere in the world.³ An expat who hasn’t contributed in three years can still tap the account for an emergency room visit in a foreign country without tax or penalty, provided the documentation is in order.

1
Internal Revenue Service. Publication 502 (2025), Medical and Dental Expenses
2
Office of the Law Revision Counsel. 26 U.S.C. 223 – Health Savings Accounts
3
Internal Revenue Service. Publication 969 (2025), Health Savings Accounts and Other Tax-Favored Health Plans
4
Internal Revenue Service. Foreign Currency and Currency Exchange Rates
5
Internal Revenue Service. International Practice Service Process Unit
6
Internal Revenue Service. How Long Should I Keep Records?
7
Office of the Law Revision Counsel. 26 U.S.C. 4973 – Tax on Excess Contributions to Certain Tax-Favored Accounts and Annuities