Umbilical cord blood storage is HSA eligible with a Letter of Medical Necessity
Umbilical cord blood storage is sometimes eligible with a Letter of Medical Necessity (LMN) from a physician if it is to treat an existing or imminently probable disease with a flexible spending account (FSA), health savings account (HSA) or a health reimbursement arrangement (HRA). To use HSA funds, your physician must provide a signed Letter of Medical Necessity (LMN) stating Umbilical cord blood storage treats a specific diagnosed condition.
Your LMN must be signed by a licensed provider, name the diagnosed condition, and be retained with your receipts for at least 3 years after the tax year.
How to claim it
- Get a signed LMN from your licensed physician tied to a specific diagnosis.
- Pay with HSA funds or reimburse yourself — keep the LMN and itemized receipt together for your records.
Frequently asked questions
Can I use my HSA debit card to pay for Umbilical cord blood storage?
Only with a Letter of Medical Necessity on file from your physician. Without an LMN this is a non-qualified distribution subject to income tax and a 20% penalty.
Do I need to keep a receipt for Umbilical cord blood storage?
Yes — for every HSA withdrawal the IRS requires documentation proving the expense was qualified. Keep itemized receipts for at least 3 years after the tax year.
Can I reimburse myself years later for Umbilical cord blood storage?
Yes — the IRS imposes no time limit on HSA reimbursements. As long as the expense was incurred after your HSA was established and you have documentation, you can reimburse yourself years or even decades later.