Are At-Home COVID Tests FSA Eligible?

A Flexible Spending Account (FSA) allows individuals to set aside pre-tax funds for eligible medical expenses, reducing taxable income and providing a dedicated source for healthcare costs. This article clarifies the eligibility of at-home COVID tests for FSA reimbursement and outlines the process for using your FSA to cover their cost.

Eligibility of At-Home COVID Tests

At-home COVID tests are eligible medical expenses for FSA reimbursement. The Internal Revenue Service (IRS) clarified that the cost of home testing for COVID-19 qualifies as a medical expense. This means individuals can use their FSA funds to pay for or be reimbursed for these tests. Eligibility extends to various over-the-counter diagnostic tests, including rapid antigen and PCR tests designed for at-home use.

This eligibility stems from their classification under IRS Code Section 213, which defines medical care expenses. The IRS confirmed that costs associated with diagnosing COVID-19 are eligible. If a health plan does not cover the full cost, individuals can seek reimbursement from their FSA for the unreimbursed portion.

Using Your FSA for At-Home Tests

You can use your FSA for at-home COVID tests through two methods: direct payment with an FSA debit card or submitting a claim for reimbursement. Many FSA plans provide a dedicated debit card for eligible healthcare purchases. When purchasing at-home COVID tests at a pharmacy or online retailer, you can typically use this FSA debit card directly at the point of sale. This method often results in automatic approval if the merchant uses an Inventory Information Approval System (IIAS), potentially eliminating the need for further documentation.

If you pay for the tests out-of-pocket, you can then submit a claim to your FSA administrator for reimbursement. This process usually involves accessing their online portal or completing a paper claim form. You will need to provide details about the purchase, including the product, date, and amount paid. After submission, claims are generally processed within a few business days, with reimbursement often issued via direct deposit.

Required Documentation for Reimbursement

To ensure a smooth reimbursement process for at-home COVID tests, accurate and detailed documentation is essential. The most important document is an itemized receipt from the point of purchase. This receipt must clearly show specific information to satisfy IRS substantiation rules.

Key details required on an itemized receipt include the date of purchase, the name of the vendor or provider, a clear description of the item purchased (e.g., “COVID-19 home test kit”), and the total amount paid. A standard credit card receipt, which often lacks these specific item descriptions, is not sufficient for reimbursement. Maintaining these detailed records is crucial, even if you use an FSA debit card, as your plan administrator may still request them for verification purposes.