Can You Use FSA Funds for Sunscreen?

Flexible Spending Accounts (FSAs) offer a valuable opportunity for individuals to manage healthcare costs. These employer-sponsored benefits allow employees to set aside pre-tax money from their paychecks, which can then be used to cover a wide range of qualified medical expenses. This tax-advantaged approach helps reduce taxable income while providing funds for health-related needs.

Understanding Flexible Spending Accounts (FSAs)

A Flexible Spending Account is a designated fund for healthcare expenses, established through pre-tax payroll deductions. This arrangement reduces an individual’s taxable income, leading to potential tax savings. For instance, contributing the 2024 maximum of $3,200 could result in significant tax relief.

FSAs operate on an annual plan year, and unspent funds are subject to a “use-it-or-lose-it” rule. However, employers may offer a grace period of up to two and a half months to spend remaining funds, or allow a limited carryover of up to $660 into the next year. Confirm specific plan details with your employer’s human resources department.

General Eligibility Rules for FSA Expenses

The Internal Revenue Service (IRS) establishes guidelines for what constitutes an eligible FSA expense. These accounts cover costs related to medical, dental, and vision care, as well as prescription drugs. Expenses must be incurred primarily for the diagnosis, cure, mitigation, treatment, or prevention of disease.

This broad definition includes items that affect any structure or function of the body, ensuring the expense is for health improvement rather than general well-being. Since 2020, many over-the-counter medications and products are eligible without requiring a doctor’s prescription.

Sunscreen as an FSA Eligible Expense

Yes, sunscreen is eligible for reimbursement through a Flexible Spending Account. The IRS recognizes sunscreen as a preventative measure against skin conditions and diseases, such as skin cancer and sunburn. This classification places it within the scope of eligible medical care rather than a cosmetic product.

To qualify, sunscreen products must meet specific criteria, including broad-spectrum protection against both UVA and UVB rays. They must also have a minimum Sun Protection Factor (SPF) of 15 or higher.

Using Your FSA for Eligible Purchases

Accessing your FSA funds for eligible purchases is straightforward. Many FSA plans provide a dedicated debit card, which allows for direct payment at the point of sale for qualified medical expenses. This method bypasses the need for submitting reimbursement claims, streamlining the process.

If you do not use a debit card, or for purchases where the card is not accepted, you can pay out-of-pocket and then submit a claim for reimbursement. Retain itemized receipts and any supporting documentation for all FSA purchases. These records may be required by your FSA administrator or the IRS to verify the eligibility of the expense.