Investigating further, IRS Notice 2004-2 Q&A-26 defines a qualified medical expense:
Q–26. What are the “qualified medical expenses” that are eligible for tax-free distributions?
A–26. The term “qualified medical expenses” are expenses paid by the account beneficiary, his or her spouse or dependents for medical care as defined in section 213(d) (including nonprescription drugs as described in Rev. Rul. 2003–102, 2003–38 I.R.B. 559), but only to the extent the expenses are not covered by insurance or otherwise. The qualified medical expenses must be incurred only after the HSA has been established. For purposes of determining the itemized deduction for medical expenses, medical expenses paid or reimbursed by distributions from an HSA are not treated as expenses paid for medical care under section 213.
This does not seem to preclude applying an HSA distribution to a future medical expense as long as the expense was incurred after the HSA account was established and as long as you have sufficient documentation to show that the distribution was applied to a qualified medical expense. However, such an interpretation would be subject to abuse where one could take a tax free distribution from the HSA and use the money for any purpose as long as they *eventually* incur a medical expense to which the distribution can be applied, even years down the road, and would make it impossible to enforce the early-distribution penalty. On the other hand, the instructions for Form 8889 say to include on line 15 those expenses that *were* used for qualified medical expenses, which suggests to me that one should not include expenses incurred after the end of the year of the tax return. As far as I know, though, the IRS is not in the habit of policing the application of HSA distributions to qualified medical expenses.
