What the IRS actually requires for a sauna or cold plunge.

1. It has to be medical care for a specific condition

HSA, FSA and HRA money can pay for “medical care” as the tax code defines it: amounts paid for the diagnosis, cure, mitigation, treatment or prevention of disease (26 U.S.C. §213(d); HSAs adopt the same definition in §223(d)(2)). The Treasury regulation narrows it: the expense must be incurred primarily for the prevention or alleviation of a physical or mental defect or illness, and an expense that is merely beneficial to general health does not count (Treas. Reg. §1.213-1(e)(1)(ii)).

In practice: a sauna bought to feel better, recover faster or live longer is a personal expense. A sauna a physician or other licensed clinician recommends to treat a diagnosed condition, and that is used for that purpose, can be medical care.

2. Would you have bought it anyway?

The Tax Court asks two questions: was the expense an essential element of treating an existing or imminent disease, and would it have been incurred anyway for non-medical reasons (Jacobs v. Commissioner, 62 T.C. 813 (1974))? If you were already planning a backyard sauna and a diagnosis came along, that second question is hard to answer honestly in your favor. Your clinician cannot answer it for you, and neither can we.

The IRS says the same about exercise: it is not medical care “even if recommended by a doctor” when it is only for general health, and a gym membership qualifies only when bought for the sole purpose of treating a specific diagnosed disease (IRS FAQ, Q10 and Q11).

3. Dual-use items: the September 2026 FAQ

On September 23, 2026 the IRS added a question about wearable devices to its nutrition, wellness and general health FAQ (Q15). It does not mention saunas, but it is the IRS's most recent statement on items with both medical and personal uses. The cost is a medical expense only if the item is bought and used primarily to diagnose, treat or prevent a specific disease. A practitioner's recommendation and the person's symptoms, diagnosis or risk factors are relevant. In the IRS's words, “a generalized desire to monitor or improve health is not sufficient.” Accessories, add-ons and subscriptions follow the same rule.

Earlier, in news release IR-2024-65 (March 2024), the IRS warned that a doctor's note based on self-reported information does not turn a general-wellness purchase into a medical expense. That warning is the reason we send you to your own physician.

4. Built-in saunas are capital expenses

Equipment installed in your home is a capital expense. It can count only if medical care is its primary purpose, and if it raises the value of your home, only the cost above that increase counts (Treas. Reg. §1.213-1(e)(1)(iii); IRS Publication 502, Capital Expenses, Worksheet A). The regulation's own example: a $1,000 elevator that adds $700 of value leaves $300 that can count.

Courts also cap the amount at the minimum reasonable cost of a functionally adequate facility. Architectural or luxury upgrades do not count (Ferris v. Commissioner, 582 F.2d 1112 (7th Cir. 1978), a home pool case). The IRS has allowed a lap pool for severe osteoarthritis, but only above the value it added (Rev. Rul. 83-33).

Our reading, not an IRS statement: a freestanding or portable unit that does not become part of the house usually does not raise its value, so the offset rarely applies. The primary-purpose and “but for” tests still do. Publication 502 also treats the operation and upkeep of a medical capital asset as medical care when the main reason for it is medical.

5. The letter of medical necessity

No statute requires a letter, but it is the standard evidence that a licensed medical practitioner recommended the treatment for a diagnosis. That can be a physician, a nurse practitioner, a physician assistant or another practitioner your plan accepts; see who can write a letter of medical necessity. FSA and HRA administrators usually require one for items like these. A useful letter names the diagnosis, the specific treatment and how it addresses the condition, the protocol (frequency, duration, temperature), how long it is needed and when it will be reassessed, and is signed and dated by the treating clinician. Many plans ask for a new letter every 12 months. See what we suggest clinicians include.

6. HSA, FSA and HRA are not the same

• HSA: nobody approves the purchase in advance. Your custodian pays what you ask, and you are responsible for showing it qualified if the IRS asks. Keep the letter, the receipt and any appraisal for as long as the return could be examined.
• Health FSA and HRA: the plan administrator must substantiate the claim before paying. It can and does deny claims, and its decision is final for that plan.

7. If you get it wrong

An HSA withdrawal that is not a qualified medical expense is added to your income, plus a 20% additional tax unless you are 65 or older, disabled, or the account holder has died (§223(f)(2) and (f)(4)). IRS Notice 2004-50 (Q&A-37) lets custodians accept the return of a distribution made by mistake, if the plan allows it. With an FSA, a denied claim simply is not paid; an improperly paid one must be repaid to the plan.

8. Contribution limits

Sources: Rev. Proc. 2025-19 and 2025-32 (2026); Rev. Proc. 2026-24 and Rev. Proc. 2026-35 (2027).

9. What the 2025 tax law did not change

The One Big Beautiful Bill Act (Public Law 119-21, July 4, 2025) expanded HSAs from 2026: telehealth before the deductible is permanently allowed, bronze and catastrophic marketplace plans count as HSA-compatible, and direct primary care fees up to $150 a month ($300 for a family) can be paid from an HSA (IRS Notice 2026-5). None of this covers equipment. A House provision that would have let HSAs pay up to $500 a year for fitness was removed before the law passed, and the separate PHIT Act has not advanced. See the policy tracker for updates.

This page explains the rules in general terms. It is not tax or legal advice. For your situation, ask a tax professional.