Can I Use My FSA for My Spouse’s Medical Expenses?

Flexible Spending Accounts (FSAs) offer a tax-advantaged way to pay for medical expenses, making them an appealing option for many families. Understanding how FSA funds can be applied toward a spouse’s medical expenses is crucial for effective financial planning and healthcare budgeting.

Employer Plan Guidelines for Spouse’s Coverage

Employer-sponsored FSAs often have specific rules regarding spousal coverage, which can vary significantly. These guidelines are outlined in the Summary Plan Description (SPD) provided by the employer. The SPD details the terms and conditions of the FSA, including eligibility criteria for dependents and spouses.

Some employers may require that a spouse be covered under the employee’s health insurance plan to qualify for FSA reimbursement. This ensures the FSA is used alongside the employer’s health benefits, simplifying the claims process. Employers may also specify eligible expenses, which could differ from general IRS guidelines.

Employees should review their SPD and consult their HR department to clarify any uncertainties. Understanding these rules helps prevent issues like denied claims or unexpected out-of-pocket costs.

Eligible Medical Items for Spouse

FSAs can cover a wide range of medical expenses for a spouse, but it’s important to know what qualifies. The Internal Revenue Service (IRS) provides a list of eligible medical expenses under IRC Section 213(d). Common items include co-pays, deductibles, and prescriptions. Specialized treatments like acupuncture or chiropractic care may qualify if medically necessary. Over-the-counter medications are also eligible under the CARES Act of 2020.

Eligible items extend to medical equipment and supplies, such as crutches, bandages, and diagnostic devices. Vision and dental care, including eye exams, glasses, and orthodontics, are also covered. Couples should keep detailed receipts and documentation to ensure smooth reimbursement and compliance with IRS rules.

IRS Rules for Spousal Eligibility

The IRS defines a “spouse” as someone legally married to the FSA account holder, as recognized by state law. Domestic partners or common-law spouses are excluded unless their state recognizes such unions as legal marriages.

FSA funds can be used for a spouse’s medical expenses if they qualify as “medical care” under IRC Section 213(d). This includes expenses for diagnosis, treatment, prevention of disease, or mitigation of a medical condition. Cosmetic procedures not deemed medically necessary are excluded.

FSAs operate under a “use-it-or-lose-it” rule, meaning funds must be used within the plan year unless a grace period or carryover provision applies. Careful planning is necessary to maximize benefits and avoid forfeiting unused funds. Reimbursing non-qualifying expenses could result in taxation.

Coordinating FSAs as a Couple

Coordinating FSAs as a couple requires strategic planning to optimize financial benefits. Each partner should review their FSA plans, as contribution limits and eligible expenses may differ. The IRS sets an annual contribution cap, which for 2023 is $3,050 per individual FSA. Couples can maximize contributions across both accounts to cover a broader range of expenses.

Couples should discuss anticipated medical needs, such as routine check-ups, prescriptions, and planned procedures, to allocate FSA funds effectively. This reduces the risk of forfeiting unused balances. Some plans offer grace periods or carryover options, which should be factored into financial planning.

Effective communication and careful coordination can help couples maximize their FSA benefits while minimizing financial waste.