Are Scrubs FSA Eligible? What You Need to Know

Flexible Spending Accounts (FSAs) offer a valuable benefit, allowing individuals to set aside pre-tax dollars to cover eligible healthcare expenses. Understanding the regulations surrounding FSA eligibility is important for maximizing this tax-advantaged savings tool.

Understanding Flexible Spending Accounts

A Flexible Spending Account is an employer-sponsored benefit that enables employees to contribute money from their paycheck, before taxes are withheld, into a dedicated account for healthcare costs. These contributions are typically made through payroll deductions, reducing your taxable income. FSAs operate under a “use-it-or-lose-it” rule, meaning any unspent funds at the end of the plan year are forfeited.

Many employers offer options to mitigate this rule, such as a grace period or a carryover amount. A grace period extends the time to use funds by up to two and a half months after the plan year ends. Alternatively, some plans allow employees to carry over a limited amount of unused funds into the next plan year. Employers can offer either a grace period or a carryover, but not both, so confirm your specific plan’s provisions.

General Eligibility Rules for FSA Expenses

The Internal Revenue Service (IRS) defines what constitutes an “eligible medical expense” for FSA reimbursement. An expense must be primarily for the diagnosis, cure, mitigation, treatment, or prevention of disease, or for affecting any structure or function of the body. This is known as the “primary purpose” rule, which dictates that expenses merely beneficial to general health are not eligible.

To receive reimbursement, expenses must be properly substantiated with detailed documentation. This includes an itemized receipt containing the patient’s name, provider’s name, date of service or purchase, type of service or product, and the cost. For certain items or services that are not automatically considered medical expenses, a Letter of Medical Necessity (LMN) from a healthcare provider may be required. An LMN serves as a doctor’s note, explaining the specific medical condition being treated, the recommended treatment, and how it alleviates the condition, along with the duration of need.

Scrubs and FSA Eligibility

Scrubs can be eligible for FSA reimbursement, but only under specific circumstances where they meet the IRS definition of a medical expense. Eligibility hinges on whether the scrubs are primarily for medical care, meaning they are required for health, safety, or hygiene reasons within a medical environment. This applies to professionals such as nurses, doctors, or medical assistants who need specialized attire for their work. If the scrubs are simply a uniform for general work attire or worn for fashion outside of a direct medical context, they are not eligible.

To substantiate the medical necessity of scrubs, an employer or healthcare provider may require specific documentation. This could include a Letter of Medical Necessity (LMN) from a doctor. The LMN should explicitly state that the scrubs are required due to a specific medical condition, or for purposes directly related to preventing or treating disease in a medical setting, such as maintaining a sterile environment or protecting against contaminants. The documentation should detail how wearing these specific scrubs directly contributes to medical care or safety for the employee or their patients.

Claiming Reimbursement from Your FSA

Once an eligible expense has been incurred, you must submit a claim to your FSA administrator for reimbursement. It is important to retain all detailed, itemized receipts for this process.

For services covered by insurance, an Explanation of Benefits (EOB) form from your insurance carrier can serve as acceptable documentation. Even when using an FSA debit card, which may offer automatic approval for some purchases, it is advisable to keep your receipts. You should also be aware of any deadlines set by your plan administrator for submitting claims after the expense has been incurred.