What Can I Buy With FSA Account?

Flexible Spending Accounts (FSAs) are a valuable resource for managing healthcare costs, providing a tax-advantaged way to pay for out-of-pocket medical expenses. Understanding what you can and cannot purchase with your FSA funds ensures that you make the most of your account without facing penalties. In this guide, we'll explore the various categories of eligible and non-eligible items, provide examples, and answer common questions related to FSA spending.

Understanding Flexible Spending Accounts

Before delving into the specifics of what you can purchase with an FSA, it is essential to understand the basics of FSAs:

• Pre-tax Contributions: FSAs allow employees to set aside a portion of their earnings, pre-tax, to pay for qualified medical expenses.
• Annual Limits: Each year, the IRS sets a maximum contribution limit for FSAs. It’s crucial to review this limit yearly as it can change.
• Use-It-or-Lose-It Rule: Typically, FSA funds must be utilized by the end of the plan year. However, some plans offer a grace period or allow a limited carryover to the next year.

Eligible FSA Purchases

Below, we categorize and expand on the various eligible items you can purchase with your FSA account.

1. Medical Expenses

FSAs cover a wide range of medical expenses. Here's a list of some common examples:

• Doctor Visits: Payments for office visits, copayments, and deductibles.
• Prescriptions: Purchase of prescription medications prescribed by a healthcare provider.
• Hospital Services: Fees related to hospital stays, surgeries, and certain medical treatments.

2. Dental and Vision Care

Dental and vision care costs are eligible FSA expenses. This includes:

• Dental Visits: Routine exams, cleanings, fillings, and other necessary dental treatments.
• Eyewear: Prescription glasses, sunglasses, and contact lenses, along with their associated care solutions.
• Eye Exams: Comprehensive eye exams to assess vision and eye health.

3. Over-the-Counter (OTC) Products

As of recent legislation, FSAs now cover a broader range of OTC medications and products without requiring a prescription. Some examples include:

• Pain Relievers: Aspirin, ibuprofen, and acetaminophen.
• Allergy Medications: Antihistamines and decongestants.
• First Aid Supplies: Bandages, gauze, antiseptics, and similar items.

4. Personal Health and Hygiene Products

Certain health and hygiene products are FSA-eligible, such as:

• Menstrual Care: Pads, tampons, and menstrual cups.
• Family Planning: Pregnancy tests and fertility monitors.
• Skin Care: Sunscreen with SPF 15 or higher and acne treatments.

5. Medical Equipment and Supplies

FSAs can be used to purchase a variety of medical equipment and supplies:

• Diabetic Supplies: Glucose meters, test strips, and insulin.
• Mobility Aids: Crutches, canes, and wheelchairs.
• Orthotics: Custom or over-the-counter shoe inserts for medical treatment.

6. Mental Health Services

Mental health is integral to overall wellbeing, and FSA funds can cover:

• Therapy: Individual or group therapy sessions with licensed therapists.
• Psychiatric Care: Visits to psychiatrists for mental health care and medications.

Non-Eligible FSA Purchases

It's just as important to know what items and services are NOT covered by FSAs. Here are some examples:

• Cosmetic Procedures: Treatments such as teeth whitening or cosmetic surgery.
• Premium Payments: Insurance premium payments are not eligible.
• General Health Products: Vitamins, meal replacement drinks, and gym memberships don't qualify unless specifically prescribed for a medical condition.

Using Your FSA Funds

To use FSA funds, most plans will issue a debit card linked to the account. When purchasing eligible items or services, simply use the card as payment. For expenses paid out-of-pocket, you can submit a claim with documented proof, such as a receipt or statement, for reimbursement. Make sure to keep all receipts and relevant documentation to avoid issues during the claims process.

Maximizing FSA Benefits

Maximizing your FSA benefits involves smart planning and strategic purchases:

• Plan Ahead: Evaluate your annual healthcare needs during open enrollment to set your contribution.
• Track Expenses: Regularly checking your FSA balance helps identify whether to increase utilization or adjust future contributions.
• Review Eligible Items and Services: Stay updated on any changes in eligible FSA expenses through IRS updates or employer notifications.

Frequently Asked Questions

Can I use my FSA funds for my family members?

Yes, FSA funds can be used to cover eligible healthcare expenses for your spouse, dependents, and any other qualifying relatives defined by IRS guidelines.

What happens if I don’t use all my FSA funds by the end of the year?

If you fail to use all the funds by the end of the year, you may forfeit the remaining balance unless your plan offers a grace period or carryover option. Always check with your employer's specific FSA plan rules.

Are there any recent changes in FSA eligibility due to legislation?

Yes, legislation changes like the CARES Act expanded FSA eligibility to include more OTC products without a prescription and menstrual care products. Always stay informed about legislative updates that impact FSA usage.

Is there a way to check current FSA regulations and limits?

Yes, the IRS provides updated annual FSA contribution limits and eligible expenses. Employers often inform employees of changes during the annual open enrollment period.

Conclusion

Flexible Spending Accounts are a powerful tool for managing healthcare expenses, offering tax savings and flexibility. By understanding the breadth of eligible items—from medical visits to personal health products—you can confidently utilize your FSA sums wisely. For comprehensive information, consult with your FSA administrator or visit the IRS website for the most current guidelines and regulations.

Explore our related guides and articles to further understand how you can leverage financial tools like FSAs to empower your health and financial wellbeing.