Is Melatonin FSA Approved for Over-the-Counter Use?

Flexible Spending Accounts (FSAs) offer a tax-advantaged way to pay for qualified healthcare expenses, allowing individuals to set aside pre-tax money from their paycheck. Eligibility rules for items covered by FSAs have seen significant changes, especially for over-the-counter (OTC) medications. This article clarifies melatonin’s eligibility for FSA reimbursement, helping you maximize your FSA benefits.

General Eligibility for Over-the-Counter Items

Before 2020, most over-the-counter medications were not eligible for FSA reimbursement without a prescription. This requirement added a step for consumers. The Coronavirus Aid, Relief, and Economic Security (CARES) Act, passed in March 2020, significantly changed FSA eligibility by removing the prescription requirement for OTC medicines and drugs.

The CARES Act broadened the scope of eligible medical expenses under IRS Publication 502. This change allows consumers to purchase a wide array of OTC medications with FSA funds without a physician’s note. This simplifies using FSA dollars for common health and wellness products. The updated rules now include items that address various health concerns, providing more flexibility for account holders.

Melatonin’s Eligibility for FSA Reimbursement

Building on the expanded eligibility for over-the-counter items, melatonin generally qualifies for FSA reimbursement. Following the CARES Act, melatonin is recognized as an eligible over-the-counter medication. This means individuals do not need a prescription from a healthcare provider to purchase melatonin with FSA funds.

Melatonin is categorized as a sleep aid. Many FSA administrators consider such products to be for the diagnosis, cure, mitigation, treatment, or prevention of disease, or for affecting any structure or function of the body, aligning with IRS guidelines for medical expenses. Consumers can purchase various forms of melatonin, including tablets, capsules, and gummies, directly using their FSA, as long as they are marketed for a medical purpose.

Using Your FSA for Melatonin Purchases

Utilizing your Flexible Spending Account for eligible purchases like melatonin is straightforward, with two primary methods. Many FSA plans provide a dedicated FSA debit card, which functions like a regular debit card at the point of sale. If the merchant’s system recognizes the purchase as an eligible expense, the transaction can be approved directly, eliminating the need for out-of-pocket payment and subsequent reimbursement.

Alternatively, if an FSA debit card is not available or the merchant’s system does not automatically approve the transaction, pay for the melatonin out-of-pocket. Then, submit a claim to your FSA administrator for reimbursement. This process involves filling out a claim form and providing documentation to prove the expense’s eligibility. Reimbursement typically occurs within a few business days to a week after the claim is processed.

Required Documentation for FSA Purchases

Retaining proper documentation for all FSA purchases is important. The most crucial document is an itemized receipt that clearly shows the product name, date of purchase, and total amount paid. This receipt serves as proof that the expense was for an eligible item and may be required by your FSA administrator for verification or in an audit.

Some FSA administrators may request additional information beyond the basic receipt, especially for larger or less common medical expenses. For standard over-the-counter items like melatonin, a detailed itemized receipt is usually sufficient. Keeping these records organized can simplify submitting claims or responding to inquiries from your FSA plan. These documents are also important for tax purposes, as the IRS may review FSA expenditures.