HSA - FSA Eligible Expenses

The Internal Revenue Service (IRS) has established a number of qualifying medical expenses for which a Flexible Spending Account (FSA) or Health Savings Account (HSA) can be *used (there are certain limitations with HSAs, please see below).

If you are looking for ways to use your tax-free money, please see the following list of the most commonly used eligible medical expenses.

Common FSA or HSA Expenses

• Abortion
• Acupuncture
• Alcoholism – inpatient treatment (including meals and lodging); also transportation to and from Alcoholics Anonymous meetings
• Ambulance service
• Artificial limbs
• Artificial teeth
• Bandages and medical supplies
• Birth control pills (prescribed by a doctor)
• Body scan
• Braille books and magazines for visually impaired persons
• Breast pumps and supplies
• Chiropractor
• Christian science practitioner
• Contact lenses and associated materials (saline solution, enzyme cleaner, etc)
• Crutches
• Dental expenses, including X-rays, fillings, braces, extractions, dentures, and other dental ailments
• Diagnostic devices such as blood sugar test kit for diabetes
• Disabled dependent care expenses (medical or work-related)
• Drug addiction, inpatient treatment
• Eye exam
• Eyeglasses
• Eye surgery (laser eye surgery or radial keratotomy)
• Feminine hygiene/menstrual care products
• Fertility enhancement (in vitro and reversal of prior surgeries preventing fertility)
• First aid supplies (bandages, etc.)
• Guide dog or other service animal
• Hearing aids, including batteries, repairs, and maintenance
• Hospital services, including meals and lodging
• Laboratory fees
• Lactation expenses
• Learning disability tutoring due to mental or physical impairment
• Lead-based paint removal
• Legal fees necessary to authorize mental illness treatment
• Long-term care
• Operations
• Optometrist
• Osteopath
• Over-the-counter drugs
• Oxygen and oxygen equipment
• Physical examination (annual visit, diagnostics)
• Prescription drugs 
• Pregnancy test kit
• Prosthesis
• Psychiatric care
• Psychoanalysis
• Psychologist
• Sterilization (including vasectomy)
• Stop-smoking programs
• Therapy
• Transplants – you can include amounts paid for medical care you receive because you are a donor or a possible donor of a kidney or other organ, including transportation
• Vasectomy
• Weight-loss program as a treatment for a diagnosed disease (obesity, hypertension, or heart disease)
• Wheelchair
• Wig for the mental health of a patient who has lost all of his or her hair from disease
• X-rays

Please note this is not a comprehensive list of eligible healthcare costs; visit irs.gov for more details.

Are over-the-counter medications eligible expenses for an FSA account?

While it appears you can purchase over-the-counter (OTC) medications with FSA funds, the IRS lists nonprescription drugs and medicines as ineligible health care expenses unless you have a doctor's prescription.

Insulin is the only expense listed under medicines that you can claim for reimbursement without a prescription. Pain relief and acne medications must be prescribed in order to be reimbursable.

Nutritional supplements are also excluded from the list of eligible items unless recommended as treatment for a diagnosed medical condition.

Who is eligible to be reimbursed via FSA or HSA for medical expenses?

All of the above-mentioned (and more) medical procedures can be paid for with tax-free FSA or HSA contributions and can be expenses for you, your spouse, child, or a “qualifying relative.” To learn what a “qualifying relative” is or to see the full IRS list of medical expenses, please click here.

*Can I use both an FSA and HSA to claim medical expenses?

If you have both an FSA and an HSA, you may only use your FSA funds to pay for health-related expenses that fall outside of your high deductible health plan coverage, such as dental or vision expenses. Please contact your certified HR expert for more information.

How can my company set up an FSA for employees?

Because of the legal requirements and privacy concerns, most companies set up an FSA through a third-party administrator. You will need to decide which plan(s) to offer, educate and communicate the plan(s) to employees, help them get enrolled, manage contributions to be deducted from paychecks and funded to their accounts, and ensure ongoing compliance.

Better yet, partner with Stratus HR and give your staff members immediate access to our health FSA, dependent care FSA, and other pre-tax benefits! Book a free consultation to learn more. 

Sources:
IRS Publication 502
IRS FAQs