Is Hand Sanitizer FSA Eligible?

Flexible Spending Accounts (FSAs) offer a valuable way for individuals to save money on healthcare costs by allowing pre-tax dollars to be set aside for eligible medical expenses. These accounts are employer-sponsored benefits, providing a dedicated fund to cover a wide range of health-related products and services. The money contributed to an FSA reduces an individual’s taxable income, effectively leading to tax savings on the funds used for healthcare. This financial tool helps manage the burden of out-of-pocket medical expenditures throughout the year.

Eligibility of Hand Sanitizer

Hand sanitizer is indeed eligible for reimbursement through a Flexible Spending Account. This eligibility stems from its classification as a healthcare item used for preventing illness. Specifically, the Internal Revenue Service (IRS) clarified in Announcement 2021-7 that personal protective equipment (PPE), including hand sanitizer, is considered a medical expense for the purpose of preventing infectious diseases like COVID-19.

The Coronavirus Aid, Relief, and Economic Security (CARES) Act permanently removed the requirement for a prescription for over-the-counter (OTC) medicines and products to be eligible for FSA reimbursement, effective January 1, 2020. This change made a broad range of everyday health items, including hand sanitizer, accessible for FSA users without a doctor’s note. For hand sanitizer to qualify, it must generally contain an alcohol concentration between 60% and 95%, aligning with public health recommendations for effective germ elimination. Products with lower alcohol content or those not primarily for medical prevention may not be eligible.

Using FSA Funds for Hand Sanitizer

Purchasing hand sanitizer with FSA funds can be done through a couple of common methods. Many FSA plans provide a debit card, which can be used directly at the point of sale, much like a regular credit card. When using this card, the eligible amount is automatically deducted from your FSA balance. It is still advisable to retain the itemized receipt for your records, even when using the debit card, in case your FSA administrator requests verification.

Alternatively, if you pay for hand sanitizer out-of-pocket, you can submit a claim for reimbursement from your FSA. For this process, detailed documentation is necessary to ensure your claim is approved. The receipt for your purchase must clearly show the name of the retailer, the date of the purchase, a specific description of the hand sanitizer purchased, and the total amount paid.

General FSA Purchase Guidelines

Maintaining detailed records is a general guideline for all FSA purchases, including hand sanitizer. Even when using an FSA debit card, keeping itemized receipts is important because FSA administrators may request them for auditing purposes to verify the eligibility of your expenses. These records should be kept for at least the duration of the tax year and potentially longer, as advised by your plan administrator.

It is also important to be aware of the “use-it-or-lose-it” rule that traditionally applies to FSAs, where funds not used by the end of the plan year are forfeited. Some plans, however, offer a grace period of up to two and a half months to use funds or allow a limited amount to be carried over to the next year. Beyond hand sanitizer, the expanded eligibility for OTC items means that products like pain relievers, cold and flu medicines, and menstrual care products are also commonly eligible for FSA reimbursement without a prescription.