Is Shampoo FSA Eligible? What Qualifies

Flexible Spending Accounts (FSAs) allow individuals to set aside pre-tax money from their paychecks to cover eligible out-of-pocket healthcare expenses. This article clarifies whether everyday products like shampoo qualify for FSA reimbursement and explains the rules governing eligibility.

Understanding FSA Eligibility

Expenses generally qualify for FSA reimbursement if their primary purpose is the diagnosis, cure, mitigation, treatment, or prevention of disease, or for affecting any structure or function of the body. Costs incurred for general health or cosmetic purposes do not qualify as medical expenses.

The Internal Revenue Service (IRS) sets these guidelines. Historically, many over-the-counter (OTC) medications required a doctor’s prescription to be FSA eligible. However, the Coronavirus Aid, Relief, and Economic Security (CARES) Act, enacted in March 2020, changed this rule.

Since January 1, 2020, OTC medicines and drugs are eligible for FSA reimbursement without a prescription. Medical necessity remains key for all eligible expenses.

Shampoo and Hair Care Eligibility Rules

Regular shampoo and other standard hair care products are not eligible for FSA reimbursement. These items are considered general health products for hygiene or cosmetic enhancement, not primarily addressing a specific medical condition.

Exceptions exist for medicated shampoos or hair care items that treat a diagnosed medical condition. Shampoos prescribed by a medical professional for conditions like severe dandruff, eczema, psoriasis, or bacterial and fungal infections of the scalp qualify. These products contain active medical ingredients.

A Letter of Medical Necessity (LMN) from a healthcare provider is required for these specialized products. This letter must detail the diagnosed medical condition, the recommended treatment, and how the shampoo alleviates the condition. This documentation confirms the expense is for medical care.

Confirming Eligibility and Making Purchases

To confirm if a specific product is FSA eligible, individuals can consult several resources. Checking the FSA plan administrator’s website or using FSA-specific online retailers often provides an eligibility list. These platforms indicate whether an item qualifies for reimbursement.

It is important to retain all receipts and supporting documentation for FSA purchases. Itemized receipts are necessary for substantiation, especially for medicated items that might require an LMN. Credit card receipts or balance forward statements do not meet these requirements.

Many FSA plans provide a debit card for direct payment at the point of sale. Even with a debit card, keeping receipts is advised in case the transaction requires further verification during an audit. For items not purchased with an FSA debit card, individuals submit a claim for reimbursement along with the necessary documentation.