Are Allergy Medications FSA Eligible?

A Flexible Spending Account (FSA) is an employer-sponsored benefit that allows individuals to set aside pre-tax money from their paychecks to cover qualified out-of-pocket medical, dental, and vision expenses. This allows participants to manage healthcare costs using tax-free dollars. This article clarifies the eligibility of allergy medications for FSA reimbursement, providing general guidance for consumers.

General Rules for FSA Eligibility of Allergy Medications

The Internal Revenue Service (IRS) defines qualified medical expenses for FSA reimbursement. Generally, medical care expenses must primarily alleviate or prevent a physical or mental disability or illness. Expenses merely beneficial to general health, such as vitamins or cosmetic procedures, are not eligible.

Historically, over-the-counter (OTC) medications generally required a doctor’s prescription for FSA reimbursement. However, the Coronavirus Aid, Relief, and Economic Security (CARES) Act in 2020 significantly changed this rule. OTC medicines and drugs, including many allergy medications, became eligible for FSA reimbursement without a prescription. This broadened the scope of eligible expenses, making it easier to use FSA funds for a wider range of health products.

Despite this change, certain items with both medical and general health purposes might still require a Letter of Medical Necessity (LMN). An LMN is a document from a healthcare provider certifying that a specific product or service is medically necessary for a diagnosed condition, rather than for general wellness. This letter outlines the medical condition, the recommended treatment, its duration, and how it alleviates the condition. While most OTC medications no longer require an LMN, it can still be needed for less common or dual-purpose items.

Common Allergy Medications and Their Eligibility

Many common allergy medications are now readily reimbursable through an FSA without a prescription. Antihistamines, which block histamine reactions in the body, are generally eligible. This applies to both oral antihistamines, such as those containing loratadine or diphenhydramine, and topical forms.

Nasal sprays, including decongestant, antihistamine, and steroid-based varieties, are eligible for allergy relief. Products like fluticasone propionate nasal sprays, commonly used for seasonal allergies, fall under this category. Allergy eye drops, which relieve itchy or watery eyes caused by allergens, are also eligible. Items like saline nasal sprays and sinus rinses, used for nasal hygiene and congestion relief, are also included.

The expanded eligibility for OTC medications encompasses a variety of other allergy-related products. These include anti-itch creams for skin reactions and steam inhalers for respiratory symptoms. While most allergy medications are eligible, general health products not specifically for a medical condition remain ineligible.

Using Your FSA for Allergy Medications

To use your FSA for eligible allergy medications, many FSA plans provide a debit card, which can be used directly at pharmacies and retailers that accept them for eligible medical expenses. This allows for immediate payment at the point of sale.

When using an FSA card or submitting for reimbursement, keep detailed records of all purchases. Itemized receipts are required, showing the merchant name, date of purchase, item description, and cost. For prescription medications, a pharmacy printout detailing the drug, date, and cost is advisable.

If an FSA debit card is not used, or for larger expenses, individuals submit a claim form to their FSA administrator for reimbursement. This form, along with required supporting documentation, can be submitted online, by mail, or by fax. Documentation should include the date of service, type of service or item, patient’s name, and amount. While many OTC allergy medications no longer require a prescription, retaining all purchase documentation is crucial for substantiation in case the FSA administrator or the IRS requests verification.