Can I buy an Apple Watch 4 using money from my Health Savings Account?

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Can you buy an Apple Watch 4 using HSA funds?
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The Apple Watch 4 Series made its debut in September of 2018 to critical acclaim. The latest Apple gadget has a number of health-monitoring features that make it fundamentally possible for it to be used as a medical device.

A discussion on news aggregation site Reddit even centered on whether the Apple Watch 4 could be purchased using funds from a Health Savings Account (HSA).

HSAs allow people to put away money tax-free in interest-bearing accounts for qualified current and future medical expenses. The thing is, before you spend the $400+ on the new Apple Watch, you need to know if it’s a qualifying expense.

Can an Apple Watch be bought as a medical device through your HSA?

HSA-qualifying medical expenses like ambulance trips, therapy, hearing aids and more are listed in Section 213(d) of the Internal Revenue Service Tax Code. As you might imagine, the Apple Watch 4, even though it’s been FDA-approved for electrocardiograms, is not listed there.

Why not? The question was a confounding one even for money expert Clark Howard. So he steered me to someone who might know: His brother, Neal Howard, an attorney who specializes in health care.

When I asked Neal if patients with HSAs could buy the Apple Watch 4 as a medical expense, he immediately reached out to the IRS. The answer he shared with me was very enlightening, but it in no way should be construed as tax advice.

RELATED: See Clark’s health savings account guide

“I did talk to the IRS and they said that the 2018 final tax laws are not available until after December 31,” Neal says. That basically means the IRS has not made a determination or they’ve decided not to share it with U.S. taxpayers yet. “You’re not going to get any answer right now.”

Furthermore, “Congress has up to the last day of the year to change the laws,” he says.

Neal says that if you want to buy the Apple Watch as an HSA expense you have a very good argument, but at this point in time “there’s nobody that’s going to give you a definitive answer.”

That said, the worst that can happen is that the IRS doesn’t agree with your reasoning and you ultimately have to pay for the Apple Watch 4 out of your bank account.

One valuable tip about HSA expenses

HSAs are usually very clear about what’s covered and not covered. The way to make an HSA work for you is to make sure anything you buy for your medical needs is documented as a qualifying expense. If you do it the right way, you can save money on everyday expenses.

“Even if the medicine you need is over the counter, you need to get a prescription to make it a qualifying medical expense,” Neal says. That means that “if you wanted to take Zyrtec for allergies, you need to get a script from your doctor,” he says. “That makes it an HSA expense.”

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