Is Hydrogen Peroxide FSA Eligible?

Flexible Spending Accounts (FSAs) offer a tax-advantaged way to pay for various healthcare expenses. These accounts allow individuals to set aside pre-tax money from their paychecks to cover eligible medical costs throughout the year. Understanding what expenses qualify for reimbursement is important for maximizing the benefits of an FSA, especially for common household items like hydrogen peroxide.

General Rules for FSA Eligibility

FSA funds can only be used for “qualified medical expenses” as defined by the Internal Revenue Service (IRS). The IRS outlines these eligible expenses in Internal Revenue Code Section 213. These definitions state that an expense must be for the diagnosis, cure, mitigation, treatment, or prevention of disease, or for affecting any structure or function of the body.

Common examples of eligible expenses include doctor visits, prescription medications, dental care, and vision care. Expenses generally not covered include cosmetic procedures unless medically necessary, or items primarily for general health benefits rather than a specific medical condition.

Over-the-Counter Medications and Supplies

Hydrogen peroxide is eligible for reimbursement through a Flexible Spending Account. Its eligibility stems from its use as an antiseptic for minor cuts, scrapes, and burns, and as a mouth rinse for specific oral irritations. This makes it a qualified medical expense when used for treatment and prevention of disease.

The Coronavirus Aid, Relief, and Economic Security (CARES) Act in March 2020 made over-the-counter (OTC) medications and certain menstrual care products eligible for FSA reimbursement without a doctor’s prescription. Common remedies like pain relievers, cold and flu medicines, allergy medications, and various first-aid supplies are now covered. Purchases must be for a medical purpose, not for cosmetic use or general wellness.

Purchasing and Substantiating FSA Expenses

When using FSA funds, retain itemized receipts for all purchases. These receipts are crucial for substantiation, the process by which FSA administrators verify a purchase was for an eligible medical expense. An itemized receipt should clearly display the date of service or purchase, a detailed description of the item or service, the cost, and the name of the provider or merchant.

Many FSA plans provide a debit card for direct payment at the point of sale. Some merchants use an Inventory Information Approval System (IIAS) that automatically substantiates eligible purchases. For out-of-pocket payments, individuals must submit a claim form to their FSA administrator with the itemized receipt to receive reimbursement. While generally not needed for hydrogen peroxide following the CARES Act, a Letter of Medical Necessity (LMN) may be required for certain non-standard items to demonstrate their medical purpose. Failure to properly substantiate a claim can lead to requests for repayment of funds.