What to Spend FSA Money On: A Breakdown of Eligible Items

A Flexible Spending Account (FSA) is an employer-sponsored benefit that allows you to set aside money on a pre-tax basis for out-of-pocket healthcare costs. This process reduces your taxable income, resulting in savings on federal and most state income taxes. The funds are intended to cover qualified medical expenses not paid for by an insurance plan. These accounts are governed by Internal Revenue Service (IRS) regulations, which provide a framework for what constitutes a qualified expense.

Common Medical and Over the Counter Expenses

The most frequent use of FSA funds involves paying for direct medical care costs not covered by insurance. This includes deductibles, which is the amount you pay before your insurance begins to pay, as well as copayments for doctor visits and hospital stays. Fees for services from physicians, surgeons, and other medical practitioners are also eligible.

Prescription medications are an eligible expense category. Any drug that requires a prescription from a medical provider can be paid for with FSA funds, from short-term antibiotics to long-term maintenance medications for chronic conditions. You should retain receipts as proof of the expense, as your plan administrator may require documentation.

The CARES Act permanently allowed for the purchase of over-the-counter (OTC) medications without a prescription. This means you can use your FSA for common household items like pain relievers such as ibuprofen and acetaminophen, cold and flu remedies, and allergy products.

First-aid supplies are another category of eligible OTC products. You can stock your medicine cabinet with items like bandages, antiseptic wipes, and antibiotic ointments. Feminine hygiene products, including tampons, pads, and menstrual cups, are also recognized as qualified medical expenses.

Eligible Dental and Vision Care

FSAs can be used for many dental services necessary for preventing or treating dental disease. This includes routine check-ups and cleanings, which are fundamental to maintaining oral health. More intensive procedures such as fillings for cavities, crowns, and root canals are also covered.

Orthodontia is a dental expense that qualifies for FSA reimbursement, including payments for braces and other corrective appliances for children and adults. You can be reimbursed for orthodontia expenses as you pay them, but the FSA administrator may require a copy of the treatment contract with your first claim.

Vision care expenses are another category where FSA funds can be applied. This starts with the cost of annual eye exams for detecting changes in vision and eye health. The costs of eyeglasses, contact lenses, and their cleaning supplies are fully eligible for reimbursement.

Beyond standard corrective lenses, FSA funds can also be used for prescription sunglasses. Surgical procedures to correct vision, such as LASIK, are also a qualified medical expense. These higher-cost procedures can be made more manageable by using the tax-advantaged dollars in your FSA.

Lesser Known Eligible Products and Services

Many lesser-known products and services also qualify for FSA reimbursement. For instance, costs for alternative therapies like acupuncture and chiropractic care are eligible when used to treat a specific medical condition. Other examples include:

• Programs to help you quit smoking, including the cost of enrollment and prescribed products like nicotine patches or gum.
• Breast pumps and lactation supplies, such as milk storage bags, for new parents.
• Travel and lodging expenses for receiving medical care in another city. This can include transportation (21 cents per mile for 2025) and up to $50 per night for lodging essential to the care.
• Sunscreen with an SPF of 15 or higher, as it helps prevent skin cancer.

Expenses Requiring Special Documentation

Some items and services require documentation from a healthcare provider to become qualified. This is known as a Letter of Medical Necessity (LOMN), a formal letter from a physician explaining why a product or service is needed to treat, diagnose, or prevent a specific medical condition.

The LOMN must state the medical condition, the recommended treatment, and how it will help. For example, while a standard gym membership is not eligible, a doctor might prescribe specific exercise programs to treat a condition like obesity. With an LOMN, the costs for that program could be reimbursed.

Common examples of expenses that typically require an LOMN include massage therapy for a diagnosed condition like chronic back pain, vitamins or supplements prescribed to treat a specific deficiency, and orthopedic shoes needed for a foot condition. Home improvements, such as installing an air purifier for someone with severe asthma or a walk-in shower for a person with mobility issues, can also qualify with an LOMN. The letter serves as proof to the FSA administrator that the expense is for medical care and not for personal convenience or general wellness.

Ineligible Expenses

To properly manage an FSA, it is just as important to know what is not covered. The IRS explicitly excludes expenses that are merely beneficial to general health, rather than for treating or preventing a specific medical condition.

Cosmetic procedures are a primary category of ineligible expenses. This includes any surgery or procedure that is directed at improving appearance but does not meaningfully promote the proper function of the body or prevent or treat illness or disease. Examples include cosmetic surgery like a facelift, teeth whitening, and hair transplants.

General wellness and personal care items are also typically excluded. This means you cannot use your FSA for gym memberships for general fitness, diet foods, or non-medicated toiletries like standard toothpaste and shampoo. While these items may contribute to a healthy lifestyle, they do not meet the IRS definition of medical care.

Finally, insurance premiums are not eligible for reimbursement from a health FSA. While you use pre-tax dollars to contribute to your FSA, you cannot then use those funds to pay for the premiums for your health, dental, or vision insurance plans. These costs are considered separate from the direct medical expenses the FSA is designed to cover.