What Does FSA Eligible Mean?

A Flexible Spending Account (FSA) is a tax-advantaged financial tool designed to help individuals pay for qualified healthcare expenses. This employer-sponsored account allows you to contribute pre-tax dollars from your salary, which can then be used for eligible medical, dental, and vision costs. Understanding “FSA eligible” means identifying which specific healthcare products and services qualify for payment using these tax-free funds.

What Qualifies as an Eligible Expense

Many common healthcare expenses are generally considered FSA eligible, covering medical needs for the account holder, their spouse, and dependents. This includes costs associated with professional medical care such as doctor’s visits, hospital stays, and diagnostic tests. Prescription medications, physical therapy, chiropractic care, and acupuncture typically qualify.

Dental care expenses are widely covered, including routine cleanings, fillings, orthodontia, and dentures. Vision care is another category, encompassing eye exams, prescription eyeglasses, contact lenses, and prescription sunglasses.

Over-the-counter (OTC) medications and products are FSA eligible without requiring a prescription. These include common items like:
Pain relievers
Cold and flu medicines
Allergy medications
First-aid supplies
Menstrual products

Various medical equipment and supplies are also generally covered expenses, such as:
Crutches
Bandages
Blood pressure monitors
Breast pumps

How to Determine Eligibility

Verifying the eligibility of a specific expense involves consulting authoritative sources. The Internal Revenue Service (IRS) Publication 502, “Medical and Dental Expenses,” serves as a foundational guide for what the IRS considers eligible healthcare expenses. Not every item listed in this publication automatically applies to all FSA plans, as it primarily outlines expenses deductible on income tax returns.

Your FSA plan administrator is the definitive authority for your specific account, and they often provide comprehensive lists of eligible items through their online portals or customer service. They can clarify any nuances specific to your plan’s design. Retailers, both online and in physical stores, also display “FSA Eligible” labels on products, which can be a helpful initial indicator, though cross-referencing with your administrator is always prudent for confirmation. For less common expenses, a Letter of Medical Necessity (LMN) from a doctor may be required. An LMN is a document from a licensed healthcare provider stating that a particular item or service is medically necessary to treat a specific condition, rather than being for general health.

Using Your FSA for Eligible Expenses

Once an expense is confirmed as FSA eligible, there are generally two primary methods for utilizing your funds. Many FSA plans issue a dedicated debit card, which functions similarly to a regular bank card at the point of sale for eligible purchases. While convenient, plan administrators may still require additional documentation, such as itemized receipts, for substantiation, especially for larger or less common expenses.

Alternatively, you can pay for eligible expenses out-of-pocket and then seek reimbursement from your FSA. This process typically involves submitting a claim form to your FSA administrator along with detailed documentation. Required documents often include an itemized receipt showing the merchant name, date of service, description of the product or service, and the amount charged. If the expense was partially covered by insurance, an Explanation of Benefits (EOB) from your insurance provider may also be necessary to prove the remaining out-of-pocket cost. Maintaining organized records and receipts for all FSA purchases is important, as they may be requested by your plan administrator or in the event of an IRS audit.

Common Ineligible Expenses

Understanding which expenses are not FSA eligible is as important as knowing what is covered, helping you avoid potential taxes and penalties. Generally, items and services primarily used for general health, cosmetic purposes, or convenience are excluded. This category often includes toiletries, vitamins or supplements taken for overall wellness (unless prescribed for a specific medical condition), and gym memberships.

Cosmetic procedures, such as elective plastic surgery or teeth whitening, are typically ineligible unless they are necessary to alleviate a congenital deformity, personal injury, or disfiguring disease. Health insurance premiums are also generally not reimbursable through a healthcare FSA. Additionally, childcare expenses are not covered by a healthcare FSA; these are typically eligible under a separate Dependent Care Flexible Spending Account (DCFSA). Expenses for illegal operations or treatments, or items that have already been reimbursed by other insurance plans, also do not qualify.