Flexible Spending Accounts (FSAs) are an important benefit that helps people reduce out-of-pocket healthcare costs and save money on taxes. An estimated 43 percent of all civilian (non-government) workers have access to an FSA through their employers. These employer-sponsored, tax-advantaged accounts allows participants (employees) to set aside money before taxes to pay for eligible medical costs that may not be covered by their health insurance plans.
If you have a health FSA, it’s important to know which products and services are FSA-eligible. The following lists identify most FSA eligible expenses and non-eligible expenses according to the IRS. Contact your benefits administrator if you have any questions.
FSA Eligible Expense Examples
FSA Eligible Services
- Alcoholism and Drug Addiction treatment
- Ambulance services
- Annual physical examination
- Body scan (electronic)
- Dental treatments (most)
- Disabled dependent expenses for medical care
- Eye exams
- Eye surgery (e.g., LASIK and PRK)
- Fertility treatments
- Home for the Intellectually and Developmentally Disabled
- Hospital services (including meals and lodging)
- Laboratory fees (associated with medical care)
- Lead-based paint removal
- Long-term care and services for chronically ill individual
- Nursing home and services
- Organ transplants
- Orthopedic services
- Physical exams
- Physical therapy
- Psychiatric care
- Special education
- Transportation expenses for medical treatments and services
- Weight loss program (requires physician’s diagnosis)
FSA Eligible Expenses – Products
- Artificial teeth (dentures, crowns, bridges, etc.)
- Bandages, non-medicated (e.g., Curad, Band-Aid)
- Birth control and contraceptive devices
- Braille reading material
- Breast feeding supplies/lactation expenses
- Capital expenses (home improvements that assist a disabled person)
- Communication equipment for the deaf or speech impaired
- Contact lenses and eyeglasses
- Co-pays, co-insurance, and deductibles
- COVID-19 PPE (face masks, hand sanitizers, and wipes for personal use)
- Crutches (purchased or rented)
- Diagnostic devices (blood sugar monitors, blood pressure monitors, etc)
- First aid kits and first aid supplies
- Guide dog or other service animals
- Hearing aid expenses (batteries, repairs, and maintenance)
- Insulin and related supplies (e.g. syringes)
- Medical Conference expenses (if related to personal chronic illness)
- Menstrual care products
- Over-the-counter medications
- Oxygen and oxygen equipment
- Pregnancy test kits
- Prescription drugs and medicine
- Prosthesis (including artificial limbs and breast reconstruction surgery)
- Smoking cessation (OTC medicines and treatment plans)
- Wigs (for hair loss due to disease or medical treatment)
- Vehicular expenses (for operational and design costs that accommodate a disabled person)
OTC FSA Eligible Products
- Acne medication
- Allergy and sinus remedies for cold, flu and cough
- Antacids and acid controllers
- Antibiotic and antiseptic sprays, creams and ointments
- Anti-gas and stomach remedies
- Anti-itch and insect bite remedies
- Bandages and dressings (medicated)
- Digestive aids
- Eczema and psoriasis remedies
- Hemorrhoidal preparations
- Motion sickness remedies
- Nicotine patches and medications
- Pain relievers (aspirin, ibuprofen, acetaminophen, etc)
- Sleep aids and sedatives
- Wart removal remedies, corn patches
FSA Eligible Expenses Require IRS Approval
Qualified expenses are approved by the IRS. IRS Publication 502 states:
Medical expenses are the costs of diagnosis, cure, mitigation, treatment, or prevention of disease, and the costs for treatments affecting any part or function of the body. These expenses include payments for legal medical services rendered by physicians, surgeons, dentists, and other medical practitioners. They include the costs of equipment, supplies, and diagnostic devices needed for these purposes.
Medical care expenses must be primarily to alleviate or prevent a physical or mental defect or illness. They don’t include expenses that are merely beneficial to general health, such as vitamins or a vacation.
Where to Purchase FSA Eligible Items
FSA eligible items can be found at many retailers such as CVS, Rite Aid, Walgreens, Walmart, and Target, and at online sites such as FSAStore.com*. Some products require a prescription and/or a receipt with Letter of Necessity in order to get reimbursed. It is always recommended to keep your receipts, prescription documents, and other expense-related records as the IRS may request this information during an audit.
If you have an FSA debit card, you can use it online, in stores, at doctor’s offices, and at other locations for eligible purchases. If you make a purchase without a debit card, you can submit a claim for reimbursement to your FSA administrator with required receipts and documentation.
FSA participants can use their account funds for themselves and their qualified dependents (i.e., spouse and children).
An Important Note About Using Your FSA Contributions
You can access the full annual contribution amount starting on the first day of the plan year. This is known as ‘uniform coverage’. Consider this example:
During enrollment season, you elected $1,500, and then on the first day of the plan year, you incurred $1,500 of FSA eligible expenses. You can use the entire $1,500 election to pay for those expenses, even though the money has not accumulated in your account yet. Throughout the rest of the year, you will still have deductions at the same rate each pay period. However, your available FSA balance stay at zero because the funds are spent.
For a complete list of FSA eligible expenses, refer to IRS Publication 502 or contact DataPath Administrative Services. If you’re interested in participating in an FSA or want more information about how the accounts work, contact your company’s HR department.
*DataPath may be compensated for items bought through our partners.