Have you ever looked down at your receipt from the drugstore and noticed a little “H” or “F” next to something you purchased? Those are health codes telling you which items on your receipt are qualifying medical expenses.
These codes are a quick way for you to see which items on your receipt can be paid for through your health savings account (HSA) or your flexible spending account (FSA) or are eligible for reimbursement through your health reimbursement arrangement (HRA).
In this article, we’ll help you understand how to read the codes on your receipts, where you can find them, and how they can help you more easily determine which medical expenses are HSA-, FSA-, and HRA-eligible.
Why are there health codes on my receipts?
The term “medical receipts” doesn’t just refer to invoices and receipts you receive from a medical provider. There are two types of medical receipts. First are the receipts from your doctor’s office or other medical establishments that show how much you paid for healthcare services and items like prescription drugs, cosmetic surgery, dental services, fertility treatments, and ambulance services.
Receipts from regular stores and pharmacies can also act as medical receipts if you purchase eligible items like over-the-counter medications or first aid supplies from these institutions. In most cases, they will show the qualified expenses you bought for tax purposes or to receive reimbursements if you have an HRA.
Internal Revenue Service notice 2006-691 outlines that all stores and pharmacies that accept HSA, FSA, and HRA debit cards must have an inventory information approval system (IIAS) in place.
Through an IIAS, a store’s inventory and point-of-sale system needs to have the ability to verify that the items purchased with an HSA, FSA, or HRA debit card are eligible out-of-pocket expenses, as defined by IRS Publication 502.
Regardless of your insurance company or health plan, according to the IRS, a few eligible medical costs include prescription eyeglasses, contact lenses, dental expenses, health insurance premiums, nicotine gum, birth control pills, weight loss programs, breast pumps, and more.
Here are just a few common IIAS-compliant stores and major pharmacies that have health codes on their receipts:
- CVS Pharmacy
- Rite Aid
- Sam’s Club
What do receipt health codes look like?
The health codes will look slightly different depending on what medical facility or retail store you purchased the item from. For example, Walmart puts an "H" at the end of the barcode for each item to indicate that it’s HSA-approved, whereas CVS Pharmacy flags FSA-eligible purchases on every receipt with an "F."
Other stores, such as Walgreens, make it easier by putting the FSA/HSA total on the bottom of the receipt after the entire expense is listed, in addition to marking each item with its own code. Even some online food delivery services, like DoorDash, indicate which items are HSA and FSA approved and total those items separately on digital receipts—depending on the merchant.
This way, if you buy non-eligible items or have other additional costs, such as groceries or cosmetics, you can see the entire expense of only the items that qualify as medical costs without purchasing those items separately.
Do I have to use a health debit card to see the codes on my receipt?
While only stores that accept health debit cards are required to print these health codes, all customers will see them on their receipts whether or not they used a health debit card for payment.
In addition, just because something is marked on your receipt as a qualified medical expense doesn’t mean you have to use your HSA, FSA, or HRA to pay for it. The code simply shows you which items are eligible, but you’re welcome to use any payment method you choose.
Whether you use a debit card, credit card, or health debit card as a form of payment for a qualified medical cost, you should make copies of receipts so you have a detailed record of them for your income tax returns in case the original is lost.
Why should I care about health codes?
Medical costs have continued to rise, especially if you have a serious medical condition. If you have a health account or reimbursement benefit plan, recognizing health codes can help you save money by enabling you to easily determine which costs can be covered by these benefits.
Paying attention to these health codes is especially important for employees with an HRA. That’s because to get reimbursed for medical care or health insurance premiums with an HRA, you must submit a receipt showing that your request for reimbursement payment is for an eligible product.
Having these codes on your receipt is an easy way for both you and your HRA plan administrator to quickly see that you’ve made a qualifying health purchase and can get reimbursed for that item. You may even notice an “H” or “F” next to something you didn’t know was eligible for reimbursement.
Additionally, if you have a receipt that totals all of your medical costs, you can purchase your regular groceries alongside the items you want to get reimbursed through your HRA because the codes will divide the medical costs and the non-health-related costs for you.
The cost of health-related expenses can be expensive. Knowing how to read your receipts will come in handy when you decide to take steps to control your medical costs. Understanding the health codes on your receipts makes it much easier to identify eligible items at merchandise stores, allowing you and your family to fully take advantage of your HSA, FSA, or HRA.
Purchasing items through a health account or reimbursement benefit plan, like an HRA through PeopleKeep, is a great way to save on medical care and other eligible expenses and enjoy the potential tax breaks that come with it. If you’re interested in offering an HRA at your business, get in touch with a PeopleKeep personalized benefits advisor.
This article was originally published on November 4, 2021. It was last updated on May 22, 2023.