Are Eye Drops FSA Eligible? What Qualifies

A Flexible Spending Account (FSA) is a tax-advantaged financial arrangement, typically offered by employers, designed to help individuals manage healthcare expenses. Funds contributed to an FSA are deducted from an employee’s paycheck on a pre-tax basis, which reduces their taxable income. This allows participants to pay for qualified medical costs with tax-free dollars.

General Rules for FSA Eligibility

FSA reimbursement eligibility hinges on the Internal Revenue Service (IRS) definition of “medical care.” IRS Publication 502 defines “medical care” as costs for diagnosing, curing, mitigating, treating, or preventing disease, or affecting any body structure or function. This establishes medical necessity: an expense must primarily alleviate or prevent a physical or mental disability or illness. Expenses solely for general health, such as vitamins or comfort items without a specific medical condition, are generally not eligible. A Letter of Medical Necessity (LMN) may be required for some items to prove medical necessity.

Eligibility Specifics for Eye Drops

Eye drops are eligible for reimbursement through a Flexible Spending Account, provided they serve a medical purpose. The CARES Act, effective January 1, 2020, removed the prescription requirement for over-the-counter (OTC) medicines and drugs. This change means many OTC eye drops are now eligible without a doctor’s note.

Prescription eye drops, prescribed by a healthcare professional for conditions like infections, inflammation, or glaucoma, are eligible. OTC medicated eye drops for allergy relief, redness reduction, or dry eye treatment are also eligible, as their primary function is to address a medical condition. Lubricating or saline eye drops, used to alleviate dry eyes, irritation, or tired eyes, qualify by affecting the eye’s function or structure. However, products solely for cosmetic enhancement, such as those to change eye color or whiten eyes without addressing a medical condition, are not eligible for FSA reimbursement. Eligibility is determined by the product’s primary use for a medical condition, not general hygiene or appearance.

How to Use Your FSA Funds

Utilizing FSA funds for eligible eye drop purchases involves straightforward payment and documentation. Many FSA plans issue a dedicated debit card, linked to your FSA balance for eligible medical expenses. This card can be used directly at the point of sale, such as pharmacies or stores that accept FSA cards.

If an FSA debit card is not used, or if a purchase requires additional substantiation, you may pay out-of-pocket and submit a claim for reimbursement. For reimbursement, detailed documentation is crucial, typically an itemized receipt showing the merchant name, date of purchase, and the dollar amount. Claims can usually be submitted online through your FSA administrator’s portal. Maintaining copies of all receipts and documentation is advisable for personal records.