Can You Use FSA for Diapers? Rules for Eligibility

Flexible Spending Accounts (FSAs) allow individuals to set aside pre-tax earnings for qualified medical, dental, and vision costs. This reduces taxable income. A common question concerns the eligibility of everyday items like diapers, which are often a significant household expense for families. This article aims to clarify the rules governing FSA eligibility for such purchases.

FSA Eligibility for Diapers

Diapers for healthy infants and toddlers are not eligible medical expenses according to the Internal Revenue Service (IRS). The IRS views them as personal hygiene or general wellness products, not primarily for diagnosis, treatment, or mitigation of a specific medical condition. Since incontinence is a normal part of development for babies, infant diapers do not meet medical necessity criteria.

However, diapers may qualify for FSA reimbursement in exceptions. If the use of diapers is medically necessary due to a diagnosed medical condition, such as chronic incontinence stemming from a specific illness or disability, they can become an eligible expense. Adult diapers are eligible if used to manage incontinence caused by a medical condition. A Letter of Medical Necessity (LOMN) from a licensed healthcare provider is required to substantiate this medical necessity. This LOMN must specify the diagnosed medical condition, detail how the diapers alleviate or treat the condition, and indicate the expected duration of the necessity.

Understanding Medical Expense Eligibility

The IRS defines a medical expense as the cost for the diagnosis, cure, mitigation, treatment, or prevention of disease, or for the purpose of affecting any part or function of the body. Expenses must primarily serve to alleviate or prevent a physical or mental disability or illness; they do not include costs merely beneficial to general health, such as vitamins without a diagnosed deficiency or elective cosmetic procedures.

Examples of eligible expenses include doctor visits, prescription medications, eyeglasses, contact lenses, and non-cosmetic dental treatments like fillings or braces. Conversely, items like teeth whitening or general health products not addressing a specific medical condition are ineligible. The underlying principle is that the expense must be directly related to a medical condition, not just for overall well-being.

Using Your FSA Account

Many FSA plans provide a dedicated debit card linked to your FSA balance. This card can be used directly at pharmacies, doctor’s offices, and other medical providers, reducing out-of-pocket payments and subsequent reimbursement claims.

For expenses not paid with the FSA debit card, or when additional documentation is requested, submit a claim for reimbursement to your FSA administrator. Retain detailed documentation for all purchases, including itemized receipts, Explanation of Benefits (EOBs) from your insurance provider, and any required Letters of Medical Necessity. This documentation may be necessary for substantiation by the FSA administrator or in an IRS audit. Most FSA providers offer online portals to monitor account balances and manage claims efficiently.