Can You Use FSA for Cosmetic Surgery?

A Flexible Spending Account (FSA) allows individuals to set aside pre-tax money from their paycheck to cover eligible out-of-pocket healthcare costs. This arrangement, typically offered through an employer, provides a tax advantage for managing various medical expenses. A common question arises regarding the use of these funds for cosmetic surgery, and the answer involves specific Internal Revenue Service (IRS) guidelines.

Understanding FSA Eligibility for Medical Expenses

The IRS defines a qualified medical expense as the cost for diagnosis, cure, mitigation, treatment, or prevention of disease, or for the purpose of affecting any structure or function of the body. This broad definition guides what expenses can be reimbursed through an FSA, ensuring that funds are used for health-related purposes. Medical expenses must primarily alleviate or prevent a physical or mental defect or illness, rather than merely being beneficial to general health.

Generally, expenses incurred solely for cosmetic reasons or to improve appearance are not considered eligible medical expenses. The IRS maintains that procedures performed purely for aesthetic enhancement, without a direct medical purpose, fall outside the scope of qualified medical expenses. The intent behind the expense determines its eligibility under FSA rules. This distinction prevents the use of tax-advantaged funds for elective procedures that do not address a diagnosed medical condition or bodily dysfunction.

When Cosmetic Surgery Qualifies as a Medical Expense

While many cosmetic procedures are not FSA-eligible, specific circumstances allow for reimbursement. The IRS permits the use of FSA funds for cosmetic surgery if it is necessary to ameliorate a deformity arising from a congenital abnormality, a personal injury, or a disfiguring disease. This criterion focuses on reconstructive purposes rather than purely aesthetic enhancements.

For instance, breast reconstruction surgery following a mastectomy due to cancer is considered a medically necessary procedure and is eligible for FSA reimbursement. Procedures to repair a cleft palate or other birth defects are generally covered, as they correct congenital abnormalities. Reconstructive surgery needed to restore function or appearance after an accident, injury, or trauma, such as repairing facial injuries, would also qualify.

Certain procedures that might seem cosmetic can also qualify if they treat a specific medical condition. For example, Botox injections prescribed by a doctor for chronic migraines or muscle disorders may be eligible, distinct from their cosmetic use for wrinkle reduction. Skin treatments like laser therapy or chemical peels recommended by a dermatologist for severe acne or scarring can qualify. Excess skin removal surgery after significant weight loss may also be eligible if deemed medically necessary and properly documented.

Documentation and Claiming Procedures

Proper documentation is essential for FSA reimbursement once a cosmetic surgery meets the qualified medical expense criteria. The primary document required is a Letter of Medical Necessity (LMN) from a healthcare provider. This letter serves as official substantiation, explaining why the procedure is medically necessary to treat a specific condition.

An LMN should clearly state the patient’s diagnosis and explain how the procedure is needed to treat or mitigate that medical condition. It should also outline how the treatment will benefit the patient’s health and may include the expected duration of treatment. The letter must be from a licensed health provider and include their name, qualifications, and signature.

Individuals must also maintain detailed records of all expenses, including itemized invoices from the medical provider showing the cost of the procedure and proof of payment. Thorough documentation is important for verification by the FSA administrator or the IRS. Claims are typically submitted to the FSA administrator through an online portal, mail, or fax, often requiring the LMN and receipts to be attached.

Procedures That Do Not Qualify

Many popular cosmetic procedures generally do not qualify for FSA reimbursement because they are performed solely for aesthetic reasons and do not meet the medical necessity criteria. These procedures are intended to improve appearance without addressing an underlying medical condition or deformity.

Common examples of ineligible procedures include facelifts, liposuction, and breast augmentation performed purely for cosmetic enhancement. Other procedures like rhinoplasty (nose reshaping) for aesthetic purposes, teeth whitening, and hair transplants for baldness are also typically excluded. Botox injections for wrinkle reduction are generally not FSA-eligible, as their primary purpose in this context is cosmetic.