Is Baby Powder an FSA-Eligible Medical Expense?

A Flexible Spending Account (FSA) offers a tax-advantaged way to pay for qualified medical expenses. These accounts allow individuals to set aside pre-tax money from their paycheck to cover healthcare costs, effectively reducing their taxable income. Understanding what constitutes a qualified medical expense is important for maximizing the benefits of an FSA.

General FSA Eligibility Rules

The Internal Revenue Service (IRS) outlines specific guidelines for what qualifies as an FSA-eligible expense. According to IRS Publication 502, medical care expenses are those paid primarily for the diagnosis, cure, mitigation, treatment, or prevention of disease, including costs for treatments affecting any structure or function of the body.

Expenses for general health, personal hygiene, or cosmetic purposes are not eligible. Items like vitamins or general toiletries do not qualify for reimbursement. The IRS emphasizes the primary purpose of the expense must be to alleviate or prevent a physical or mental defect or illness.

Baby Powder and FSA Eligibility

Baby powder is not eligible for reimbursement through a Flexible Spending Account. It is classified as a general hygiene or cosmetic product, intended to absorb moisture and prevent common discomforts like diaper rash. Its primary use does not align with the IRS definition of medical care, which focuses on the treatment or prevention of a diagnosed medical condition.

However, exceptions exist. If a medical professional prescribes baby powder for a diagnosed medical condition, it could become eligible. This might include severe or chronic skin conditions requiring its use as part of a treatment plan, not routine preventative care.

A Letter of Medical Necessity (LMN) is required to substantiate the expense. This letter demonstrates to the FSA administrator that the product is for a specific medical purpose, not general wellness. The IRS cautions that a doctor’s note does not automatically convert a personal expense into a qualified medical expense; medical necessity must be clearly established.

Submitting FSA Claims

When submitting an FSA claim, specific documentation is necessary for reimbursement. You must provide itemized receipts showing the vendor’s name, purchase date, a detailed expense description, and the amount paid. Generic credit card receipts are insufficient as they lack itemized details.

For expenses requiring a Letter of Medical Necessity, this document must be submitted with your itemized receipt. The LMN is issued by a licensed healthcare provider, detailing the medical condition treated and how the item or service is necessary for treatment. Most FSA administrators offer various claim submission methods, including online portals, mobile applications, fax, or mail. Retain copies of all submitted documentation for your records, as the IRS may request them for verification.