Can You Use an FSA for Physical Therapy?

Using a Flexible Spending Account (FSA) for physical therapy expenses is permissible, offering a way to pay for necessary medical care with pre-tax dollars. An FSA is an employer-sponsored benefit that allows individuals to set aside money from their paycheck before taxes are withheld. This tax-advantaged account helps cover qualified healthcare costs not typically reimbursed by other health plans, such as deductibles, co-payments, and certain medical services. Physical therapy is a common example of an eligible expense, allowing you to save money on rehabilitation and pain management.

Eligibility Criteria for Physical Therapy

Physical therapy qualifies as an eligible FSA expense when it is medically necessary for treating a specific health condition, injury, or disease. This means the therapy must be prescribed by a physician or another licensed healthcare professional to diagnose, cure, mitigate, treat, or prevent an illness or to affect any body structure or function. Physical therapy sessions are commonly covered for post-surgical rehabilitation, recovery from an accident or sports injury, or managing chronic pain conditions like back pain. The services must be provided by a qualified physical therapist or their supervised staff to meet Internal Revenue Service (IRS) guidelines for medical expenses. General fitness activities, such as gym memberships for overall wellness, or sports massages without a specific medical diagnosis, do not qualify as eligible expenses.

Required Documentation for Reimbursement

To ensure reimbursement for physical therapy expenses, meticulous record-keeping is necessary. You will need a physician’s prescription or a Letter of Medical Necessity (LOMN) that clearly states the medical condition being treated and the necessity of the physical therapy. This document should include the patient’s name, the date, a relevant diagnosis code if available, and the prescribing physician’s signature. In addition to the prescription, detailed receipts from the physical therapy provider are essential. These receipts must specify the date of service, the type of service provided (e.g., “physical therapy session”), the name of the provider, the patient’s name, and the exact amount charged for the service.

Submitting Your FSA Claim

After gathering all necessary documentation, you can submit your FSA claim for reimbursement. Many FSA plans offer a dedicated debit card for direct payment, though you may still need to submit detailed receipts and the prescription to your FSA administrator to substantiate the expense. For manual claim submissions, use an online portal or a physical claim form provided by your FSA administrator. This process requires entering account holder and specific expense details. After submission, processing times vary, but reimbursements are often issued via direct deposit or check within a few business days or weeks, depending on your plan.

General FSA Rules for Spending

A primary rule for FSAs is the “use-it-or-lose-it” provision, which requires funds to be used within the plan year or they are forfeited. Employers often offer exceptions to this rule to provide more flexibility. One common exception is a grace period, which allows an additional two and a half months beyond the plan year to incur expenses, such as extending a calendar-year plan’s deadline to March 15th of the following year. Another common exception is the carryover option, which permits a limited amount of unused funds to be rolled over into the next plan year; for plan years beginning in 2025, the maximum carryover amount is $660. Employers can offer either a grace period or a carryover, but not both, so checking your specific plan documents is crucial to understand which options apply.