Does an FSA Cover Allergy Medicine?

A Flexible Spending Account (FSA) is an employer-sponsored benefit that allows individuals to set aside pre-tax money from their paycheck to pay for eligible healthcare expenses. This arrangement reduces taxable income, leading to potential tax savings. Many people wonder if common medical needs, such as allergy medicine, can be covered by these accounts.

Understanding Flexible Spending Accounts

The Internal Revenue Service (IRS) defines which expenses are eligible, generally encompassing medical, dental, and vision care. These funds can be used for expenses incurred by the account holder, their spouse, or qualified dependents.

A significant characteristic of FSAs is the “use-it-or-lose-it” rule, which historically meant any unused funds at the end of the plan year were forfeited. However, employers can now offer flexibility, either through a grace period or a rollover option. A grace period typically extends the time to use funds by up to two and a half months into the new plan year, while a rollover allows a specific amount of unused funds, such as up to $660 for 2025, to carry over to the next year. Employers typically offer one of these options, not both.

The Coronavirus Aid, Relief, and Economic Security (CARES) Act permanently eliminated the requirement for a doctor’s prescription for over-the-counter (OTC) medications to be eligible for FSA reimbursement. This change significantly broadening the range of readily available healthcare products that can be purchased with FSA funds.

Specifics of Allergy Medicine Coverage

Both prescription and over-the-counter allergy medications are generally eligible for reimbursement through an FSA. This includes a wide array of products commonly used to alleviate allergy symptoms. For instance, antihistamines like loratadine, cetirizine, fexofenadine, and diphenhydramine are eligible.

Nasal sprays, such as fluticasone and triamcinolone, decongestants, and various eye drops designed for allergy relief are also typically covered. Additionally, related medical services aimed at diagnosing or treating allergies qualify as eligible expenses. These services include doctor’s office visits, allergy testing (such as skin prick tests or patch tests), and prescribed allergy shots or immunotherapy. Products like anti-itch creams, sinus rinses, and Neti pots are also generally included among the eligible items.

Using Your FSA Funds

FSA funds can be used for eligible expenses through a few convenient methods. Many FSA plans issue a debit card, linked to your FSA balance. This card can be used directly at the point of sale at various merchants, including pharmacies, drug stores, grocery stores, and online retailers that accept healthcare debit cards.

When using an FSA debit card, some transactions may require further substantiation from your plan administrator to confirm eligibility. Retain itemized receipts for all purchases made with your FSA card. These receipts should clearly show the date of service, the provider’s name, the type of service or product purchased, the cost, and the patient’s name.

For expenses paid out-of-pocket, you can submit a claim for reimbursement from your FSA. This typically involves completing a claim form provided by your FSA administrator and submitting it along with the required documentation. Acceptable documentation generally includes itemized statements or Explanation of Benefits (EOB) forms from your insurance provider, particularly for services processed through insurance. Maintaining detailed records of all FSA-related expenses is important for accurate reimbursement and for potential IRS verification.