What Can You Buy With FSA

When it comes to healthcare expenses, knowing what you can purchase with a Flexible Spending Account (FSA) is crucial. FSAs are tax-advantaged financial accounts set up through an employer to allow you to use pre-tax dollars for qualified medical expenses. Leveraging this account wisely can save you considerable money, as it reduces your taxable income while allowing you to pay for a range of health-related products and services. This guide will explore the many facets of FSAs, detailing what they can be used for and how to make the most of your contributions.

Understanding FSAs

Before diving into specific purchases, it's important to understand how FSAs work. An FSA is often used in conjunction with employer-sponsored health insurance plans. You decide an annual contribution amount, which is then deducted from your paycheck before taxes. These funds can be used throughout the year for eligible expenses.

Key Features of FSAs:

• Contribution Limits: As of 2023, the maximum contribution for an FSA is set by the IRS and typically increases annually. Ensure you check the current limit each year to maximize your contributions.

• Use-It-Or-Lose-It Rule: Generally, FSA funds must be used within the plan year. However, some employers may offer a grace period or allow a limited rollover of funds.

• Eligible Expenses: Expenses must qualify under IRS guidelines to be eligible for FSA reimbursement. These typically include medical, dental, and vision expenses.

What You Can Buy With FSA

Medical Expenses

1. Doctor Visits: Copayments and deductibles for visits to general practitioners and specialists.

2. Prescription Medications: FSA funds cover prescription drugs and sometimes over-the-counter medications with a prescription from a healthcare provider.

3. Medical Devices:

   • Blood sugar test kits and supplies
   • Heart rate monitors
   • Blood pressure monitors

4. Therapy and Counseling: If recommended by a doctor for a specific medical condition.

5. Surgery and Hospitalization: Out-of-pocket expenses related to surgeries or hospital stays not covered by insurance.

Dental Care

1. Routine Cleanings: Copayments and deductibles for dental check-ups and cleanings.

2. Orthodontics: Braces and retainers are eligible, even if payments are spread over a period of time.

3. Dental Surgeries and Treatments: This includes filings, crowns, and root canals.

Vision Care

1. Eye Exams: Routine eye examinations are eligible expenses.

2. Prescription Eyewear:

   • Glasses
   • Contacts
   • Prescription sunglasses

3. Vision Correction Procedures: Procedures such as LASIK surgery are also eligible.

Over-the-Counter Medications and Products

1. Pain Relievers: Medications like ibuprofen or acetaminophen without a prescription.

2. Allergy Medication: Antihistamines and other allergy treatments.

3. Cold and Flu Treatments: Cough syrup, decongestants, and similar products.

4. First-Aid Supplies:

   • Bandages
   • Thermometers
   • Antiseptic products

Note: Since the pandemic, FSAs have been expanded to cover many over-the-counter medications without needing a prescription.

Reproductive Health

1. Birth Control: Includes pills, patches, and other prescribed contraceptives.

2. Pregnancy Tests: Over-the-counter pregnancy tests are covered.

3. Fertility Treatments: Diagnostic, surgical procedures, and fertility drugs are eligible.

Health and Wellness Equipment

1. Fitness Products: Some FSA plans allow for the purchase of fitness and wellness equipment, such as fitness trackers, if prescribed by a healthcare provider.

2. Sleep Aids: Expenses related to sleep assistance products may be eligible with a doctor's note.

3. Smoking Cessation: Programs and products if prescribed.

Mental Health

1. Therapy Sessions: Counseling or therapy services directly related to a diagnosed condition.

2. Psychiatric Treatment: Costs associated with psychiatric visits and prescribed medications.

Tables: Common and Uncommon FSA-Eligible Items

Maximizing Your FSA

Strategic Planning

1. Estimate Expenses: Look at previous years’ medical expenses to predict future costs, ensuring you contribute the right amount.

2. Plan for Big Purchases: If you anticipate large expenses, such as orthodontics or surgery, plan your contributions around these.

3. Monitor Your Balance: Regularly check your FSA balance and deadlines to avoid losing funds due to the use-it-or-lose-it rule.

Additional Considerations

1. Combine FSAs and HSAs: If you have both an FSA and a Health Savings Account (HSA), understand which expenses are more beneficial to use from which account.

2. Submitting Claims: Keep all receipts and documentation for expenses, as claims must typically be substantiated with evidence.

3. Check Specific Plan Rules: FSAs are specific to your employer’s plan. Some may allow for a grace period or a limited rollover of unused funds into the next year.

4. Periodical Market Research: Some non-traditional items may become eligible as healthcare evolves, so stay informed of IRS updates and your employer’s plan modifications.

Frequently Asked Questions

Is there a deadline for using FSA funds?

Typically, FSA funds must be used by the end of the plan year. Some plans offer a grace period of up to 2.5 months or allow you to carry over up to $610 to the next year.

Can I use FSA funds for family members?

Yes, you can use your FSA for eligible expenses incurred by your spouse, dependents, and any qualifying relatives who meet the IRS definition.

What happens to unused funds?

Generally, unused funds after the plan year deadline are forfeited. Always check your plan specifics for any rollover or grace period options.

How do I get reimbursed from my FSA?

Submit a claim to your FSA provider, typically through your employer. This process usually requires submitting a form along with receipts or invoices of the eligible expenses.

Are gym memberships covered?

Gym memberships are generally not covered unless it's prescribed by a physician as treatment for a specific medical condition.

If you're looking to make the most of your FSA but are unsure about specific items, reviewing your plan documents or consulting with your FSA administrator can provide clarity. Understanding what expenses qualify can lead to substantial savings on healthcare costs. This proactive approach ensures you're using every dollar you contribute to your FSA effectively, while planning for unforeseen medical needs.