WEAR IT Act: Use Your HSA for Smartwatches, Capping Medical Expense Deduction at $375 Annually

The aptly named WEAR IT Act is setting up a significant change for how you can spend your pre-tax health dollars. Starting in 2026, this legislation allows you to treat the cost of certain wearable health devices—like smartwatches or specialized trackers—as a qualified medical expense for tax-advantaged accounts, including Health Savings Accounts (HSAs), Flexible Spending Accounts (FSAs), and Archer MSAs. There’s a hard cap, though: you can only claim up to $375 of the device’s cost per tax year (SEC. 2).

The $375 Health Tech Allowance

This is a big deal if you rely on an HSA or FSA. Currently, these accounts are generally restricted to reimbursing traditional medical services, prescriptions, and a few specific devices. The WEAR IT Act expands this list to include technology that is rapidly becoming standard for managing health. Think of it this way: if you purchase a device that costs $500, you can use $375 of your pre-tax HSA funds for it. This essentially makes that chunk of the device tax-free, saving you money compared to buying it with post-tax dollars.

What Exactly Counts as a 'Wearable'?

Not every fitness tracker will qualify. The bill is specific: the device must be something you wear, and its main job must be to collect and analyze health information—like heart rate, blood sugar, or sleep patterns—specifically to help diagnose, treat, prevent, or manage a disease, impairment, or health condition (SEC. 2). It also qualifies if it actively helps a doctor with a diagnosis or provides treatment. This means your basic step counter likely won’t make the cut, but a sophisticated medical-grade heart monitor or a continuous glucose monitor (CGM) that helps manage diabetes absolutely would. The intent here is to cover devices with genuine medical utility, not just general wellness gadgets.

The Timeline and the Catch

While this is a welcome change for tech-savvy health consumers, you can’t run out and buy a new device right now and claim it. The effective date for this provision is for expenses incurred after December 31, 2025. So, you’ll need to wait until the 2026 tax year to start utilizing this benefit. The $375 annual cap is important to note, too. While it makes expensive devices more accessible, if you’re purchasing a high-end medical wearable that costs $600 or $800, you’ll still need to pay the remaining balance with post-tax money. This cap keeps the tax benefit focused and contained.

Real-World Impact: Managing Chronic Conditions

For the millions of Americans managing chronic conditions, this change could be huge. Take someone with hypertension who uses a sophisticated smartwatch to track blood pressure and heart rhythm data 24/7. This data can be crucial for their doctor to adjust medication or treatment plans. Under the WEAR IT Act, that person can now use their FSA funds—which often must be spent within the plan year—to cover up to $375 of that device’s cost. This lowers the barrier to entry for preventative and proactive health management, shifting some of the cost burden from out-of-pocket spending to pre-tax savings, which is a net win for the consumer.