Does Your FSA Cover Mental Health Services?

A Flexible Spending Account (FSA) is an employer-sponsored benefit allowing individuals to set aside pre-tax money for out-of-pocket healthcare expenses. This reduces taxable income, leading to potential savings on federal income and payroll taxes. Funds are typically deducted from an employee’s paycheck before taxes, providing a tax advantage for eligible medical costs.

Covered Mental Health Expenses

Many mental health services are eligible for reimbursement through a Flexible Spending Account if they address a specific medical condition. These services must primarily aim for the diagnosis, cure, mitigation, treatment, or prevention of an illness or disability.

Eligible expenses include therapy sessions, such as psychotherapy and counseling, when administered by a licensed professional for a diagnosed mental health condition. Psychiatric care, including consultations and medication management by licensed psychiatrists, also typically qualifies. Prescription medications for mental health conditions, like antidepressants or anti-anxiety drugs, are covered if prescribed by a licensed healthcare provider. Inpatient mental health treatments at hospitals or specialized facilities are generally eligible for diagnosis or therapy of a mental health condition.

For certain services, a Letter of Medical Necessity (LOMN) from a healthcare provider may be required to confirm eligibility. This document explains how a recommended service will benefit an individual’s health, specifying the type and duration of treatment. Examples where an LOMN might be necessary include alternative therapies or specific over-the-counter items prescribed for a mental health condition.

Non-Covered Mental Health Expenses

Not all mental health-related expenditures qualify for FSA reimbursement, particularly those not directly related to a diagnosed medical condition. Expenses primarily for general well-being, personal enjoyment, or educational purposes are typically ineligible. For instance, marriage counseling or general stress reduction programs do not qualify unless a specific mental health condition of one spouse is being treated and medically documented.

Services like life coaching, personal development workshops, or certain self-help books and apps are generally not covered. IRS guidelines emphasize that expenses must be for alleviating or preventing a physical or mental disability or illness, not merely for general health improvement.

Submitting FSA Claims

After incurring an eligible mental health expense, submitting a claim for FSA reimbursement requires proper documentation to ensure approval.

The most common documents needed include itemized receipts or detailed invoices from the service provider. These documents must clearly show the provider’s name, the date the service was rendered, a description of the service received, and the total amount paid or owed.

If health insurance covered a portion of the expense, an Explanation of Benefits (EOB) from the insurance carrier is often required. The EOB details what the insurance paid and the remaining amount an individual is responsible for. Obtain this information directly from your insurance carrier’s website or by contacting them.

Claims can typically be submitted through various methods, including an online portal, a mobile application, or by mail or fax. The process involves entering details about the expense and uploading or attaching the required documentation. After submission, claims are generally processed within a few business days, with reimbursements often issued via direct deposit or check.