In a word, yes.
You can use a Health Savings Account (HSA) to pay nearly all costs to train, purchase, and feed a service animal, including paying veterinary bills.
You can’t use HSA funds to pay for a therapy animal. Only for a service animal for yourself, a spouse, or dependent.
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Service Animals vs. Therapy Animals
Service animals are trained to perform specific tasks for individuals with disabilities, like guiding the blind, reminding the owner to take medication, detecting seizures, and helping the owner accomplish the basic activities of daily living.
The key difference is in training. Service animals are highly trained by professionals. Therapy animals require little or no training. They provide owners with comfort and support but aren’t trained for specific tasks for disabilities.
Service animals are not considered “pets,” and under the Americans With Disabilities Act from rules generally prohibiting pets from restaurants, stores, and other public accommodations.
How Much Does a Service Animal Cost?
Service animals are very expensive to breed and train. Getting a service animal trained to support your specific disability can cost anywhere from $15,000 to $30,000.
This includes selecting the right animal, training for specific tasks, and ensuring the animal can perform reliably in various environments.
HSAs and Service Dogs
You can use your HSA to cover these costs tax-free, provided the service animal is medically necessary.
“Medically necessary” means the animal must be essential for the treatment, alleviation, or prevention of a disease or condition as prescribed by a healthcare provider.
HSA funds can also cover the service animal’s food, medical bills, and upkeep, as long as these expenses are directly related to the animal’s service functions.
To use HSA funds, you may need a letter of medical necessity (LMN) from your doctor. This letter should state your diagnosis and detail how the service animal helps with your condition.
You should also keep detailed receipts of food, grooming, vet bills, and other expenses related to your service animal.
This way, if the IRS ever challenges you about the validity of your HSA expense, you can document that it was indeed a qualified medical expense.
Can I use HSA funds to pay for a therapy animal as well?
No, you cannot use HSA funds to pay for a therapy animal. Only for a qualified service animal.
HSAs are designed to cover qualified medical expenses as defined by the IRS, and therapy animals, unlike service animals, do not qualify.
Can I use my HSA for a service animal’s expenses if I get the animal mid-year?
Yes, you can start using your HSA funds for qualified expenses related to the service animal as soon as it’s prescribed by a healthcare provider.
That means you can start paying for training and other acquisition costs as soon as you have a LMN from your doctor and place the order. You don’t have to wait until you are in physical possession of the service animal.
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Conclusion
HSAs are tremendous tax tools. If you qualify, making regular pre-tax contributions to a health savings account is one of the smartest moves you can make with your money.
No other wealth accumulation vehicle in the tax code provides the combination of tax benefits that an HSA does:
- Tax-free contributions
- Tax-deferred growth
- Tax-free withdrawals for qualified medical expenses.
HSAs can save thousands per year in taxes. More importantly, having money in an HSA makes it much easier to access the healthcare you need – including getting a service dog or other service animal.
Watch a quick video on how HSAs can save thousands per year in taxes.
Questions? Don’t hesitate to reach out. Our HSA For America Personal Benefits Managers are among the most experienced experts on HSAs in the country,
For Further Reading: Unlock the Power of Your HSA – How To Pay for Chiropractic Treatment From Your Health Savings Account | How To Use Your HSA to Pay for OTC Medication | How To Use Your HSA to Pay For Transportation Expenses
Hi! I’m Misty Berryman, and I’m one of your Personal Benefits Managers. I like working with HSA for America because we’re creating solutions to healthcare problems. Our focus on money-saving alternatives like HSA plans and health sharing programs, and the variety of health share programs we offer, are what set us apart. Read more about me on my Bio page.