What You Can Spend Your FSA Money On

Understanding FSA-Eligible Expenses

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You can't spend your FSA money on just anything. Learn what you can use your FSA money for, and what you can't. Image © Steve Lewis Stock/Getty Images

Since the money in your Flexible Spending Account is tax advantaged—you don’t pay income taxes on it—the IRS limits what you can spend it on. You’re only permitted to use it for eligible medical expenses. However, if you don’t spend it by the end of the year, you risk losing all or part of it.

Flexible Spending Accounts are use-it-or-lose-it accounts. Your employer is allowed, but not obligated, to carry over up to $500 of the unspent funds in your FSA to next year’s FSA.

However, if you have more than $500 remaining in your account by the end of the year, everything greater than $500 must be forfeited to your employer.

It’s to your benefit to spend, before the end of the year, any funds that won’t be rolled over to an FSA for next year. But, what can you spend those funds on? What counts as an eligible medical expense? How do you use up left-over FSA funds before the end of the year? What can you use your FSA funds for throughout the year so you’re not forced to use them all up at the end of the year?

Common Throughout-The-Year FSA Eligible Expenses

  • Your health insurance deductible.
  • Your health insurance copayments and coinsurance.
  • Medical services your health insurance doesn’t cover and you pay for out-of-pocket. This includes:
    • Acupuncture
    • Chiropractic care
    • Care provided by a Christian Science practitioner
    • Care provided by a psychologist, psychiatrist, or therapist to treat or prevent a physical or mental problem
    • Medications
      • Prescription medications
      • Over-the-counter medications only with a prescription, and only if allowed in the FSA plan your employer has set up.
      • Insulin and diabetic supplies like glucometer strips
    • Dental Care to prevent or treat a dental disease
      • Cleaning by dental hygienist
      • Routine dental exam by dentist
      • Treatments like fillings, root canals, dentures, braces, and orthodontics
    • Vision Care to prevent or treat diseases of the eye or vision problems
      • Optometrist or Ophthalmologist exam
      • Eye surgery to correct vision
      • Glasses or contact lenses for vision correction
      • Contact lens solutions
    • Hearing Care
      • Hearing aids
      • Hearing aid batteries
    • Reproductive care
      • Contraceptives, condoms, IUDs
      • Sterilization surgery
      • In vitro fertilization expenses
      • Pregnancy test kits
      • Birth preparation classes (Lamaze)
      • Breast feeding supplies

    Best Last-Minute Year-End FSA Eligible Expenses

    If it’s approaching the end of the year and you’re facing a use-it-or-lose-it situation, here are some last-minute ways to use up those FSA funds. Remember, you may use your FSA funds to pay the eligible medical expenses for you, your spouse, your dependents, and even your children up to age 26 years old.

    • Band-Aids and bandages
    • First aid kit
    • Medical thermometer
    • Ace wraps, splints, joint supports and braces
    • Reading glasses
    • Contact lens solution
    • Eye drops
    • Hearing Aid Batteries
    • Denture care products
    • Foot care products like arch supports, moleskin pads, and bunion cushions used to treat a foot ailment.
    • Sunburn cream
    • Wound care products
    • Heart rate monitor

    If you’re really down to the wire and running out of time, Drugstore.com’s FSA store has a large selection of FSA eligible items that can be purchased online at the last moment. Although you must purchase the FSA item before your year-end FSA deadline, most FSAs allow you several weeks to file a claim for reimbursement of FSA eligible items purchased before the deadline.

    What's Not Allowed

    Expenses that aren't used to treat or prevent a medical illness, condition, or ailment generally aren't allowable FSA expenses. Even some medical procedures, if done purely for cosmetic reasons rather than to treat an illness or defect, aren't FSA eligible. For example, breast reconstructive surgery after you've had a mastectomy is FSA eligible, but breast implants for purely cosmetic reasons are not.

    Quasi health related items like toothpaste, toothbrushes, and even water-pics aren't FSA eligible because they're considered personal care items used for routine personal hygiene rather than to prevent or treat a medical condition.

    Expenses for items used to promote a healthy lifestyle like dietary supplements, gym memberships, and work-out DVDs generally aren't FSA eligible expenses

    You can’t use your FSA funds to buy an over-the-counter medication unless you have a physician prescription for it.

    Sources:

    IRS Publication 969

    IRS Publication 502

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