Can I Use My FSA for Contact Lenses?

Flexible Spending Accounts (FSAs) offer a valuable benefit, enabling individuals to allocate pre-tax dollars for eligible healthcare expenses. This financial tool helps reduce out-of-pocket costs for medical, dental, and vision needs. Understanding eligible expenses is important for maximizing FSA benefits.

Understanding FSA Eligibility for Vision Care

A Flexible Spending Account (FSA) is an employer-sponsored benefit allowing you to set aside pre-tax money for qualified out-of-pocket healthcare costs. The Internal Revenue Service (IRS) outlines what constitutes a qualified medical expense, generally including costs for diagnosis, treatment, or prevention of disease, or for treatments affecting body function. Vision care is an eligible category under FSA rules.

Prescription contact lenses are qualified medical expenses, and FSA funds can cover their cost. This eligibility extends to items necessary for their proper care and maintenance, such as contact lens solutions, enzyme cleaners, and storage cases. However, contact lenses purchased solely for cosmetic purposes, without a corrective prescription, are not eligible.

Using Your FSA for Contact Lenses

Utilizing your FSA for prescription contact lenses typically involves two primary methods. Many FSA plans provide a dedicated debit card, linked to your FSA funds. This card can be used directly at eligible merchants, such as optometrists’ offices or online retailers. When using an FSA debit card, selecting “credit” at the terminal is typically the correct procedure.

Alternatively, if an FSA debit card is not used, you can pay out-of-pocket and submit a claim for reimbursement from your FSA administrator. Documentation is required, including an itemized receipt showing the purchase, date, and amount paid. A valid prescription for the contact lenses is also necessary to substantiate medical necessity. Retain copies of all receipts, as the IRS may require substantiation of FSA purchases.

Important Considerations for FSA Use

A significant aspect of Flexible Spending Accounts is the “use-it-or-lose-it” rule, meaning FSA funds must typically be used by the end of the plan year or they may be forfeited. Employers often offer options to mitigate this forfeiture.

Many plans may include a grace period, allowing an additional 2.5 months after the plan year to use FSA funds. Another option is a limited rollover, permitting a certain amount of unused funds (e.g., up to $660 for 2025) to be carried over into the next plan year. Employers can offer either a grace period or a rollover, but not both. Confirm with your plan administrator which provisions apply to your FSA.