Is Toothpaste FSA Eligible? Explaining the Rules

Flexible Spending Accounts (FSAs) allow individuals to set aside pre-tax money from their paychecks for qualified out-of-pocket healthcare costs. This reduces taxable income. Funds can be used for various medical and dental expenses for the employee, their spouse, and dependents.

FSA Eligibility Basics

An expense qualifies for FSA reimbursement if it falls under the Internal Revenue Service (IRS) definition of “medical care.” This definition, found in IRS Section 213, includes amounts paid for the diagnosis, cure, mitigation, treatment, or prevention of disease, or for affecting any body structure or function. Funds can be used for a broad range of healthcare needs, including doctor visits, hospital stays, and prescription medications.

However, expenses considered merely beneficial to general health are not eligible. The primary purpose of the expense must be to address a physical or mental illness or condition, rather than for cosmetic reasons or overall wellness. Certain dental services, such as routine cleanings, fillings, and orthodontics, are generally considered qualified medical expenses.

Over-the-Counter Items and Toothpaste Eligibility

The eligibility of over-the-counter (OTC) items for FSA reimbursement changed with the CARES Act. This legislation removed the previous requirement for a doctor’s prescription for many OTC medicines and drugs. This expansion included items like pain relievers, allergy medications, and cold and flu remedies.

Despite these changes, regular toothpaste is not eligible for FSA reimbursement. The IRS classifies standard toothpaste as a personal hygiene item for general health maintenance. Items used for daily personal care, like toothbrushes or dental floss, are not considered medical expenses for FSA purposes.

However, medicated toothpaste or specific dental items may be eligible if prescribed by a doctor or dentist to treat a diagnosed medical condition. For such cases, a Letter of Medical Necessity (LOMN) is required. An LOMN is a document from a licensed healthcare provider explaining why an item or service is necessary to treat a specific health condition. This letter should include the patient’s diagnosis, the reason the purchase is needed, and the expected duration of the treatment.

Using Your FSA for Eligible Purchases

Once an expense is eligible, many FSA plans provide a dedicated debit card linked to the FSA balance. This card can be used to pay for qualified medical expenses directly at the point of purchase. After using the card, some purchases may require substantiation, which means providing proof that the expense was eligible.

For expenses not paid with an FSA debit card, or if substantiation is requested, individuals can submit claims for reimbursement. Required documents include itemized receipts or an Explanation of Benefits (EOB) from your insurance provider. These documents must clearly show the date of service, the provider’s name, a detailed description of the expense, and the amount paid. Retain copies of all receipts and documentation, as these may be needed for potential IRS audits.