Does FSA Cover COVID Tests? What You Need to Know

A Flexible Spending Account (FSA) is a valuable employee benefit that allows individuals to set aside pre-tax money from their salary to cover specific out-of-pocket healthcare expenses. These funds are typically used for medical, dental, and vision costs that insurance might not fully cover. By using pre-tax dollars, an FSA effectively reduces an individual’s taxable income, leading to potential tax savings on eligible expenditures.

Eligibility of COVID-19 Tests for FSA Coverage

The Internal Revenue Service (IRS) has confirmed that both over-the-counter (OTC) and diagnostic laboratory COVID-19 tests are considered eligible medical expenses for reimbursement through a Flexible Spending Account. This determination aligns with IRS Code Section 213(d), which defines deductible medical expenses. The inclusion of these tests recognizes their role in diagnosing and preventing the spread of the virus.

This eligibility extends to tests purchased for personal use, whether acquired from a pharmacy, online retailers, or directly from a healthcare provider. It is important to note that while many health plans may cover the cost of these tests, individuals cannot seek reimbursement from both their health plan and their FSA for the same expense.

The scope of eligible expenses also includes certain personal protective equipment (PPE), such as masks, hand sanitizer, and sanitizing wipes, when their primary purpose is to prevent the spread of COVID-19. The employer’s specific FSA plan document must permit the reimbursement of these medical expenses, though most plans are structured to allow for any expense qualifying under Section 213(d) of the Code.

Submitting Your FSA Claim for COVID-19 Tests

There are generally two primary methods for utilizing your FSA funds for COVID-19 tests: direct payment using an FSA debit card or submitting a claim for reimbursement. Many employers provide an FSA debit card, which functions similarly to a regular debit card but is specifically linked to your FSA balance for eligible medical expenses. When using this card at approved merchants, the system often automatically verifies the eligibility of the purchase, potentially reducing the need for immediate paperwork.

If you pay out-of-pocket for COVID-19 tests, you will need to submit a claim for reimbursement to your FSA administrator. Obtain a claim form, often available online. After completing the form, you will submit it along with the necessary supporting documentation, often via an online upload, fax, or mail. Reimbursement processing times can vary, but typically range from a few business days to a couple of weeks, depending on the administrator and submission method.

Required Documentation for Reimbursement

For a smooth reimbursement process, gather specific documentation before submitting your FSA claim. A detailed receipt is the most common and crucial piece of evidence. This receipt should clearly display the date of purchase, the name of the vendor or provider, a specific description of the item purchased (e.g., “COVID-19 antigen test”), and the exact amount paid.

Credit card slips or canceled checks are generally not sufficient as they often lack the required detailed information about the service or item. Keeping organized records, such as digital scans or physical copies of all pertinent receipts, is advisable. Even if you use an FSA debit card, retaining receipts is recommended in case your administrator requests further substantiation for a transaction.