Can You Reimburse Yourself From an FSA?

A Flexible Spending Account (FSA) allows individuals to set aside pre-tax money for eligible medical expenses. This employer-sponsored benefit provides a tax advantage, as contributions are not subject to federal income, Social Security, or Medicare taxes. FSAs help participants pay for qualified healthcare services and products, reducing their out-of-pocket spending. Funds contributed through payroll deductions are then available for reimbursement of these expenses throughout the plan year.

Defining Eligible Expenses for Reimbursement

Flexible Spending Accounts cover expenses for the diagnosis, cure, mitigation, treatment, or prevention of disease, as determined by the IRS. Common examples include co-pays for doctor visits, deductibles, and co-insurance payments. Prescription medications, dental care such as cleanings, fillings, and orthodontia, and vision care including eyeglasses and contact lenses are also generally eligible.

Over-the-counter (OTC) medications and products, like pain relievers, cold and flu remedies, and feminine hygiene products, are typically eligible for reimbursement. This eligibility was expanded by the CARES Act, removing the prior requirement for a doctor’s prescription for many OTC items. Expenses for a participant’s spouse and qualified dependents can also be reimbursed from the FSA. Expenses cannot be reimbursed by another health plan, ensuring the FSA is used for out-of-pocket costs.

Required Documentation for Your Claim

Specific documentation is required for IRS compliance to substantiate an FSA reimbursement claim. Itemized receipts from service providers or merchants are primary proof. Receipts must clearly show the date of service or purchase, a detailed description of the service or item, the cost, and the name of the provider or merchant.

Credit card statements or canceled checks are generally not sufficient, as they often lack the necessary detail to verify expense eligibility. If a healthcare service was processed through health insurance, an Explanation of Benefits (EOB) from the insurance company serves as supporting documentation. An EOB includes the patient’s name, date of service, type of service, charged amount, provider’s name, and any amount paid by insurance, all information required for the FSA claim. Accurate and complete documentation helps ensure claim approval and avoid delays or denials.

Submitting Your FSA Reimbursement Request

Submitting an FSA reimbursement request is a straightforward process once documentation is gathered and verified for eligibility. Most FSA administrators offer multiple methods for claim submission, including online portals, mobile applications, mail, or fax. The claim form must be completed accurately, including details such as the amount requested, the provider, the date of service, and who received the service.

Participants upload digital copies of itemized receipts or EOBs when using online portals or mobile apps. For mail or fax submissions, paper copies of the claim form and supporting documentation are sent to the administrator. Retain copies of all submitted documents for personal records. While some FSA debit card transactions may be automatically approved, keeping receipts for all purchases is recommended in case additional verification is requested.

Understanding Reimbursement Payouts and Deadlines

After an FSA claim is submitted, the reimbursement process typically begins with the administrator reviewing documentation for approval. This review usually takes a few business days, often within 24 to 48 hours. Once approved, reimbursement is commonly issued via direct deposit to the participant’s bank account, with funds often appearing within 1 to 3 business days after approval. Some administrators may also offer reimbursement through a mailed check, which generally takes a longer timeframe, typically 5 to 10 business days, to arrive.

FSAs are subject to the “use-it-or-lose-it” provision, mandating that funds generally must be used by the end of the plan year or they are forfeited. Employers have options to mitigate this rule. They may offer a grace period, allowing participants an additional two and a half months after the plan year ends to incur new eligible expenses using prior year’s funds.

Alternatively, an employer might permit a carryover amount, allowing a limited portion of unused funds to roll over into the next plan year; for 2025, the maximum carryover amount is $660. Employers can choose to offer either a grace period or a carryover, but not both, or neither. A “run-out period” is common, providing participants a specific timeframe, typically 90 days after the plan year or grace period ends, to submit claims for expenses incurred during the eligible period.