Can You Use HSA or FSA for Compounded GLP-1s?

If you're paying out of pocket for compounded semaglutide or tirzepatide, your Health Savings Account (HSA) or Flexible Spending Account (FSA) can significantly reduce your actual cost. At $200-350 per month for compounded GLP-1s, using pre-tax funds could save you $500-1,400 annually.

This guide explains the IRS rules, what documentation you need, and which providers make HSA/FSA payments easiest.

Why GLP-1 Medications Qualify for HSA/FSA

Under IRS rules, HSA and FSA funds can be used for expenses that diagnose, cure, mitigate, treat, or prevent disease. This includes prescription medications when they're medically necessary—not cosmetic.

GLP-1 medications like semaglutide and tirzepatide qualify because they're FDA-approved (in their brand-name forms) for treating specific medical conditions:

• Obesity (BMI ≥30)
• Overweight with comorbidity (BMI ≥27 with conditions like high blood pressure, high cholesterol, or sleep apnea)
• Type 2 diabetes

The key word is "prescribed." Over-the-counter supplements marketed for weight loss are generally not HSA/FSA eligible. But prescription GLP-1 medications—including compounded versions—qualify when a licensed provider determines they're medically appropriate for your condition.

How Much You'll Actually Save

The savings from using HSA/FSA funds equal your marginal tax rate. Here's what that means in dollars:

When you factor in state income taxes and FICA taxes (7.65%), the effective savings can be even higher—up to 40% or more in high-tax states like California or New York.

HSA vs. FSA: Key Differences

Health Savings Account (HSA)

• Requires a High Deductible Health Plan (HDHP)
• Funds roll over year to year—no "use it or lose it"
• 2025 contribution limits: $4,300 individual / $8,550 family
• Triple tax advantage: Tax-free contributions, growth, and withdrawals for medical expenses
• Can invest funds for long-term growth
• Portable: Stays with you if you change jobs

Flexible Spending Account (FSA)

• Available with any employer health plan
• Use it or lose it: Funds typically expire at year-end (some plans offer $640 rollover or 2.5-month grace period)
• 2025 contribution limit: $3,300
• Full amount available on January 1st, even if not yet contributed
• Not portable: Tied to your employer

For GLP-1 medications, an HSA is generally better if you have access to one, since the funds never expire and you can use them throughout your weight loss journey—which may take 12-24 months or longer.

What Documentation You Need

To use HSA/FSA funds for compounded GLP-1s and avoid potential audits, keep these documents:

Essential Documents

1. Valid prescription from a licensed healthcare provider (the telehealth consultation creates this)
2. Itemized receipts showing:
   • Date of purchase
   • Medication name and dose
   • Amount paid
   • Provider or pharmacy name
3. Letter of Medical Necessity (LMN) if requested by your HSA/FSA administrator

Letter of Medical Necessity

Some HSA/FSA administrators require a Letter of Medical Necessity for weight loss medications. This is a simple document from your prescribing provider stating that the medication is medically necessary for treating your condition (obesity or overweight with comorbidity).

Most telehealth providers will supply this upon request. Ask before you sign up, or check their FAQ—many explicitly mention HSA/FSA eligibility and documentation support.

How to Pay with HSA/FSA

Option 1: Direct HSA/FSA Card Payment

Many telehealth GLP-1 providers accept HSA/FSA debit cards directly at checkout. This is the simplest method—just use your HSA/FSA card like any other credit card. The transaction is automatically categorized as a medical expense.

Providers that explicitly accept HSA/FSA cards include Hims & Hers, Ivim Health, and several others. Check each provider's payment options page before enrolling.

Option 2: Pay and Reimburse

If your provider doesn't accept HSA/FSA cards directly, or if your card is declined:

1. Pay with your regular credit/debit card or bank account
2. Save your itemized receipt
3. Submit a reimbursement claim through your HSA/FSA administrator's portal
4. Receive funds back into your bank account (usually within 1-5 business days)

For HSA accounts specifically, you can reimburse yourself at any time—even years later—as long as you have documentation that the expense occurred while you had an active HSA.

Option 3: FSA Store Partnership

Some providers have partnered with FSA Store or similar platforms to streamline HSA/FSA purchasing. LifeMD, for example, offers GLP-1 programs through FSA Store's weight loss section, making eligibility and payment straightforward.

Common HSA/FSA Issues and Solutions

Card Declined at Checkout

HSA/FSA cards sometimes get declined for telehealth services because the merchant category code (MCC) doesn't automatically trigger medical expense approval. Solutions:

• Pay with another method and submit for reimbursement
• Call your HSA/FSA administrator to pre-authorize the transaction
• Ask if the provider has a specific billing code for HSA/FSA transactions

Membership Fees May Not Qualify

Some providers bundle medication with membership or subscription fees. Be aware that the "membership" portion may not be HSA/FSA eligible—only the medication and direct medical consultation costs typically qualify.

When submitting for reimbursement, request an itemized receipt that separates medication costs from any non-medical fees. Bundled providers like Hims or Henry Meds may not provide this breakdown, which could complicate reimbursement claims.

Cosmetic vs. Medical Use

The IRS distinguishes between cosmetic procedures (not eligible) and medical treatments (eligible). Weight loss medication is medical when prescribed for obesity or overweight with comorbidity. It's not considered cosmetic because it treats a recognized medical condition.

However, if you're obtaining GLP-1s primarily for cosmetic weight loss without a qualifying BMI or medical condition, the expense may not qualify. Your prescription and medical records should document the medical necessity.

Maximizing Your HSA/FSA Benefits

FSA Year-End Strategy

If you have FSA funds expiring at year-end, you can prepay for multiple months of medication. Many providers offer 3-month supplies or will allow you to pay ahead. This prevents losing FSA funds while stocking up on medication you'll use anyway.

HSA Investment Strategy

If you have a healthy HSA balance, consider paying for GLP-1s out of pocket now and keeping receipts for future HSA reimbursement. Your HSA funds can remain invested and grow tax-free, then you can reimburse yourself later—potentially in retirement when your tax bracket may be different.

This strategy only makes sense if you have sufficient cash flow to pay out of pocket and want to maximize HSA investment growth. For most people, paying directly with HSA/FSA funds is simpler and provides immediate savings.

Combine with Compounded Savings

Using HSA/FSA for compounded GLP-1s stacks two savings sources:

1. Compounded semaglutide costs $149-350/month vs. $1,349+ for brand-name Wegovy
2. HSA/FSA saves an additional 20-35%+ through tax advantages

Net result: Treatment that would cost $16,000+ annually with brand-name medications can cost under $2,500 with compounded options and tax-advantaged payment—a savings of over 80%.

2025 HSA/FSA Contribution Limits

For tax year 2025, the contribution limits are:

At $250/month for compounded GLP-1s, you'd spend $3,000 annually—well within HSA contribution limits and just under the FSA cap. This makes it feasible to cover your entire year of treatment with pre-tax dollars.

Key Takeaways

• Yes, compounded GLP-1s are HSA/FSA eligible when prescribed for obesity or overweight with comorbidity
• Save 20-35%+ on your medication costs by using pre-tax dollars
• Keep receipts and prescriptions for documentation
• Request a Letter of Medical Necessity from your provider if your administrator requires one
• HSA is preferred over FSA for long-term treatment since funds don't expire
• Check if providers accept HSA/FSA cards directly before enrolling to avoid reimbursement hassles