Is Dandruff Shampoo an FSA Eligible Expense?

Flexible Spending Accounts (FSAs) allow you to pay for healthcare expenses with pre-tax dollars, reducing your taxable income. These employer-sponsored accounts let you set aside money for qualified medical costs. Understanding what expenses qualify for reimbursement is important, especially for items like dandruff shampoo. This article clarifies the specific conditions under which dandruff shampoo may be reimbursed through an FSA.

General FSA Eligibility Guidelines

Flexible Spending Accounts primarily cover qualified medical expenses as defined by the Internal Revenue Service (IRS). These expenses are amounts paid for the “diagnosis, cure, mitigation, treatment, or prevention of disease, or for the purpose of affecting any structure or function of the body.” This broad definition includes common healthcare costs like doctor visits, prescription medications, and dental or vision care. Expenses for general health, rather than treating a specific condition, do not qualify.

The CARES Act in March 2020 eliminated the prescription requirement for over-the-counter (OTC) medicines and drugs to be FSA eligible. Many OTC medications are now fully eligible without restriction. However, “dual purpose” products or items not clearly for medical treatment may still require additional documentation to prove medical necessity. A Letter of Medical Necessity (LMN) is a statement from a medical practitioner explaining why an item or service is recommended to treat a specific health condition and confirm its medical purpose. Your FSA administrator ultimately determines eligibility based on IRS guidelines and your specific plan’s rules.

Dandruff Shampoo and Medical Expense Qualification

Most general shampoos are not FSA eligible, as they are considered for everyday hygiene and general health. However, medicated shampoos can be an exception. For dandruff shampoo to qualify as an FSA-eligible expense, it must be used to treat a specific medical condition, such as seborrheic dermatitis or psoriasis of the scalp.

A diagnosis from a healthcare professional is required to establish the shampoo’s medical necessity. For medicated dandruff shampoos containing active ingredients like zinc pyrithione, selenium sulfide, or coal tar, a doctor’s prescription or a Letter of Medical Necessity (LMN) is typically needed. This documentation should detail the medical condition being treated, the specific treatment plan including frequency and dosage, and the duration for which the shampoo is medically necessary. Some plans may even limit eligibility to only the excess cost of the dandruff shampoo over the price of a standard, non-medicated shampoo. Always confirm requirements with your FSA plan administrator.

Steps for FSA Reimbursement

Once you have purchased your FSA-eligible dandruff shampoo and gathered the necessary documentation, submit a claim for reimbursement. Most FSA administrators offer convenient submission methods, including online portals, mobile applications, or traditional mail. The claim process requires specific documentation to substantiate your expense.

You will need an itemized receipt clearly showing the dandruff shampoo purchase, including the date, merchant’s name, item description, and amount paid. Canceled checks or credit card statements alone are not sufficient proof of purchase. If a prescription or Letter of Medical Necessity was required, include a copy with your claim. Keeping accurate records and copies of all submitted documents is good practice.

While specific deadlines vary, expenses must typically be incurred by the end of the plan year, with claims submitted by a later date. Always consult your FSA plan administrator for precise submission deadlines and procedures.