Financial Planning and Analysis

What OTC Items Are Covered by FSA?

Maximize your FSA. Discover which everyday health products are covered and how to easily get reimbursed for your over-the-counter purchases.

A Flexible Spending Account (FSA) offers a valuable way for individuals to manage healthcare costs by setting aside pre-tax money from their income, effectively reducing taxable income.

FSAs are typically offered as an employer-sponsored benefit. The funds contributed can be used for the account holder, their spouse, and qualifying dependents. These accounts cover a broad range of medical and dental expenses, including deductibles and co-payments. Understanding which items qualify for reimbursement, especially over-the-counter (OTC) products, can help maximize the benefits of an FSA.

Understanding Eligible Over-the-Counter Expenses

Recent legislative changes, notably the Coronavirus Aid, Relief, and Economic Security (CARES) Act, significantly expanded the scope of eligible over-the-counter (OTC) expenses for Flexible Spending Accounts. This act permanently removed the prescription requirement for most OTC medicines and drugs, making it easier for individuals to use their FSA funds for everyday health needs.

Many categories of OTC medications are now eligible for FSA reimbursement. These include pain relievers such as ibuprofen, acetaminophen, and aspirin. Cold, flu, and allergy medications, including cough suppressants, decongestants, and antihistamines, are also covered.

Digestive aids, such as antacids, laxatives, anti-diarrheals, and products for heartburn relief, are eligible. First-aid supplies, including bandages, antiseptic wipes, and comprehensive first-aid kits, are also covered.

Menstrual care products, including tampons, pads, liners, and menstrual cups, are eligible. Eye and ear care products such as eye drops, contact lens solutions, reading glasses, and ear wax removal kits are also eligible. Family planning items, like condoms and pregnancy tests, are also covered.

Certain durable medical equipment that can be purchased over-the-counter, such as crutches, blood pressure monitors, and blood glucose monitors, are eligible. Sunscreen with an SPF of 30 or higher is also covered.

Identifying Ineligible Over-the-Counter Expenses

While Flexible Spending Accounts cover a wide array of over-the-counter medical expenses, certain items are not eligible for reimbursement. Products intended for general hygiene or cosmetic purposes, rather than to treat or prevent a specific medical condition, are ineligible. This includes items such as regular toothpaste, soap, shampoo, and everyday moisturizers.

Cosmetics and toiletries are excluded unless a medical professional prescribes them to treat a diagnosed medical condition. Similarly, vitamins and dietary supplements taken for general health, such as daily multivitamins, are not FSA-eligible.

Vitamins or supplements for weight loss or general wellness are ineligible unless prescribed by a healthcare provider for a specific medical condition. Luxury items or products primarily for general comfort, such as hot tubs or saunas, are not considered medical expenses. IRS guidelines focus on expenses incurred for the diagnosis, cure, mitigation, treatment, or prevention of disease, or for affecting any structure or function of the body.

Submitting Claims for Reimbursement

To receive reimbursement for eligible over-the-counter expenses, an itemized receipt serves as the primary proof for FSA claims. Receipts must show the purchase date, merchant’s name, item description, and total amount paid.

Keep all receipts, even for purchases made with an FSA debit card, as your plan administrator may request verification. Many FSA plans provide a dedicated debit card for direct use at the point of sale, which often auto-substantiates the expense and reduces manual claim submissions.

If a debit card is not used or if additional documentation is requested, claims can be submitted through various methods. These include an online portal, a mobile application, or by mailing a completed claim form with the required receipts. Reimbursement timelines vary, with many providers processing claims within one to two business days. Be aware of any deadlines for submitting claims, which include the end of the plan year or a grace period extending a few months beyond.

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