Can You Use an FSA for Prescriptions?

A Flexible Spending Account (FSA) offers a way to manage healthcare costs by allowing you to set aside pre-tax dollars from your paycheck. This dedicated account helps cover eligible medical, dental, and vision expenses, effectively reducing your taxable income. FSAs are a tool for covering prescription costs. They provide financial relief for out-of-pocket expenses not covered by insurance.

Eligible Prescription Expenses

Flexible Spending Accounts cover many prescription costs. This includes both brand-name and generic FDA-approved prescription medications with a doctor’s order. These eligible prescriptions can address chronic conditions, sudden illnesses, or even preventive treatments.

The Coronavirus Aid, Relief, and Economic Security (CARES) Act expanded the eligibility of over-the-counter (OTC) medications and products. Since January 1, 2020, many OTC drugs and medicines (e.g., pain relievers, cold and flu remedies, allergy medications, antacids) no longer require a doctor’s prescription to be FSA-eligible. This expansion also includes menstrual care products like tampons, pads, liners, and menstrual cups, reimbursable without a prescription. FSA funds also cover prescribed medical items like insulin and certain medical devices such as blood glucose monitors and testing strips.

Using Your FSA Funds

Accessing your FSA funds for eligible expenses, including prescriptions, involves two main methods. Many FSA plans provide a dedicated debit card, linked directly to your FSA balance. Use this card at pharmacies, doctor’s offices, and other healthcare providers to cover costs directly. When using the debit card, select “credit” at the terminal, even though it operates as a debit transaction.

Alternatively, pay for eligible expenses out-of-pocket and seek reimbursement from your FSA administrator. Submit a claim form with documentation. Documentation includes an itemized receipt showing the date, provider, item description, and amount. For insured expenses, an Explanation of Benefits (EOB) statement details insurance coverage and your responsibility.

For some items, a Letter of Medical Necessity (LMN) from a healthcare provider may be required. This letter certifies the product or service is for a diagnosed medical condition. Maintain organized records for efficient reimbursement and potential substantiation requests.

Additional Qualified Medical Expenses

Beyond prescriptions, Flexible Spending Accounts cover many other qualified medical expenses. Eligible categories include co-payments, co-insurance, and deductibles for medical, dental, and vision services. This also extends to dental care (e.g., cleanings, fillings, orthodontia) and vision care (e.g., eyeglasses, contact lenses, eye exams). Medical equipment like blood pressure monitors, thermometers, and first aid supplies also qualify.

Not all health-related expenses are eligible for FSA reimbursement. For instance, health insurance premiums, cosmetic procedures, and general wellness items like vitamins (unless medically necessary with proper documentation) are not covered. Reviewing your plan’s Summary Plan Description (SPD) is advised due to variations in plan offerings and IRS guidelines. This document, provided by your employer, outlines eligible expenses and specific requirements for your FSA program.