What Is FSA Eligible

Understanding what items are eligible for purchase with a Flexible Spending Account (FSA) can save you money and make managing your health expenses more efficient. An FSA is a special account you put money into that you use to pay for certain out-of-pocket health care costs. You don’t pay taxes on this money, so you save an amount equal to the taxes you would have paid on the money you set aside.

Key Benefits of FSAs

Tax Advantages

FSAs offer pre-tax benefits, meaning money contributed to an FSA is not subject to federal income tax, Social Security tax, and, in most cases, state income taxes. This means more savings for expenses you are likely to incur throughout the year.

Expense Coverage

FSAs cover a wide range of expenses from healthcare products to services, providing financial ease when managing health-related costs.

Budget Management

By setting aside pre-tax dollars for health expenses, FSAs help in planning and managing annual healthcare budgets effectively.

What Can You Buy with FSA?

FSAs are designed to cover medical expenses not fully reimbursed by health plans, including:

1. Medical Expenses:

• Co-pays and deductibles for doctor visits and medical procedures.
• Out-of-pocket expenses for medications and treatments not covered by insurance.

2. Over-the-Counter Products:

• Pain relievers like aspirin or ibuprofen
• Cold medications, allergy relief, and heartburn medications
• Menstrual care products like tampons, pads, and menstrual cups

3. Medical Equipment:

• Blood pressure monitors
• Thermometers
• First aid kits
• Crutches, wheelchairs, and walkers

4. Vision and Dental Care:

• Prescription eyeglasses and sunglasses
• Contact lenses and cleaning solutions
• Dental cleanings, root canals, and braces

Category	Examples of FSA Eligible Items
Medical Expenses	Co-pays, deductibles, doctor visits
OTC Medications	Pain relievers, cold meds, allergy pills
Medical Equipment	Blood pressure monitors, thermometers
Vision & Dental	Eyeglasses, contacts, dental cleanings

Understanding FSA Eligibility

Eligibility for FSA reimbursement often depends on whether an expense is deemed medically necessary. The IRS, which governs FSA use, provides guidelines on eligible expenses:

Medical Necessity

• Products and services must diagnose, cure, mitigate, treat, or prevent a disease.
• Personal products, merely beneficial but not necessary, typically are not eligible.

Documentation Requirements

To get reimbursed through your FSA, submitting proper documentation is necessary:

• Receipts or invoices that include the date of service, patient name, and type of service or product purchased.
• A Certificate of Medical Necessity for items not typically covered, which usually requires a doctor’s diagnosis or prescription.

Challenges and Common Misconceptions

Navigating FSA eligibility can sometimes be challenging. Here are some frequent misunderstandings:

Misconception 1: FSAs Cover All Health Expenses

• FSAs cover many health expenses, but not all. Cosmetic procedures, such as teeth whitening, generally aren't covered.

Misconception 2: Prescription Requirement

• Some people incorrectly believe that only prescription medications are eligible for FSA purchase. FSAs cover a range of over-the-counter items which became eligible with the CARES Act in 2020.

Misconception 3: Automatic Expense Approval

• Using an FSA to pay does not guarantee expense approval. Who or what you pay must still meet eligibility requirements.

Maximizing Your FSA

To make the most of your FSA, consider the following tips:

Plan Your Contributions Wisely

• Estimate your healthcare expenses at the beginning of the year, so you fund your FSA adequately. Over-contributing can be a concern if you don’t plan to use all the allocated funds, as they often are "use-it-or-lose-it."

Keep Good Records

• Always keep receipts and related documentation for FSA claims. Staying organized will make reimbursement smooth and hassle-free.

Review Benefits Annually

• Rules and items eligible for FSA can change. Reviewing your FSA plan annually helps you stay on top of what’s covered.

FAQs Around FSA Eligibility

Can I use FSA to buy vitamins and supplements?

Typically, vitamins and supplements are not FSA eligible unless a healthcare provider prescribes them as medically necessary.

Is cosmetic surgery FSA eligible?

Cosmetic surgery or procedures aimed at improving appearance without addressing a medical condition are generally not FSA eligible.

Are fitness memberships or gym equipment FSA eligible?

No, gym fees or fitness memberships are not covered because they are not deemed medically necessary.

Do I need a prescription for OTC drugs to be FSA eligible?

Since the CARES Act, OTC drugs are FSA eligible without a prescription.

What happens if I don’t use my full FSA amount?

FSAs are typically "use-it-or-lose-it," meaning any unused funds may be forfeited at the end of the plan year. Some plans offer a grace period or allow you to carry over a small portion to the next year, so it's essential to check your specific plan.

Conclusion

Understanding what purchases are FSA eligible arms you with the knowledge to make informed, money-saving decisions on your healthcare spending. Regularly reviewing your FSA eligible expenses list and staying informed about policy changes ensures you effectively leverage this valuable benefit. Whether it's for handling unexpected medical costs or simply managing regular health care expenses, using an FSA wisely can considerably ease the financial burden while maximizing your tax savings. For more detailed information on specific products or to manage your FSA account, you may want to consult your FSA plan administrator or refer to IRS Publication 502.