An expense is FSA eligible when the IRS treats it as medical care under Section 213 of the Internal Revenue Code, which is what lets you pay for it tax-free from a Flexible Spending Account. In plain terms, that means the expense has to diagnose, treat, or prevent a disease, or affect a structure or function of the body.1Office of the Law Revision Counsel. 26 USC 213 – Medical, Dental, Etc., Expenses Copays, prescriptions, glasses, and bandages sail through. Vitamins, gym memberships, and cosmetic work usually don’t. The rest of this article walks through where the line sits and how to tell which side of it a given purchase falls on.
The Rule That Decides Eligibility
Section 213 defines qualifying medical care as amounts paid to diagnose, treat, or prevent disease, or to affect any structure or function of the body.1Office of the Law Revision Counsel. 26 USC 213 – Medical, Dental, Etc., Expenses The second half of that definition does more work than people expect. It’s why LASIK surgery qualifies even though it doesn’t treat a disease, and why orthodontics count even when the motivation is partly cosmetic. Each affects how the body functions, so each passes the test.
The other half of the rule is the word “primarily.” An expense has to be primarily medical in nature. A general wellness purchase doesn’t qualify unless it’s tied to a specific diagnosed condition.2Internal Revenue Service. Frequently Asked Questions About Medical Expenses Related to Nutrition, Wellness, and General Health A multivitamin off the shelf is not FSA eligible. The same vitamin recommended by your doctor to treat a documented deficiency may be, but only with a letter to prove it. That distinction, between what looks healthy and what treats a diagnosis, is the single most important thing to understand about FSA eligibility.
What Clearly Qualifies
Doctor, Dental, and Vision Care
Standard medical costs are the easiest expenses to get approved. Copayments, deductibles, and coinsurance for office visits all qualify, along with lab tests and imaging. Dental treatment with a medical purpose is covered: fillings, crowns, extractions, braces, and dentures. Purely cosmetic dental work like teeth whitening isn’t.3Internal Revenue Service. Publication 502 – Medical and Dental Expenses
Vision expenses are fully eligible because they relate directly to a body function. Eye exams, prescription glasses, contact lenses, lens solution, and laser eye surgery all qualify.3Internal Revenue Service. Publication 502 – Medical and Dental Expenses
Mental Health Treatment
Psychiatric care, psychologist visits, and psychoanalysis are FSA eligible. Inpatient treatment for alcohol or drug addiction qualifies too, including the cost of meals and lodging at a treatment facility.3Internal Revenue Service. Publication 502 – Medical and Dental Expenses The service has to be clinical. Marriage counseling or general life coaching without a diagnosis behind it typically won’t clear the bar.
Prescription Drugs and Insulin
Any medication prescribed by a licensed provider is FSA eligible. Insulin gets special treatment: it qualifies even without a prescription, because of its role as a life-sustaining medication.4FSAFEDS. Frequently Asked Questions – What Kind of Over-the-Counter Medicines or Products Are Eligible
Over-the-Counter Medicines and Products
Before 2020, most over-the-counter medications required a prescription to be FSA eligible. The CARES Act permanently removed that requirement. You can use FSA funds for pain relievers, cold and allergy medicines, antacids, acne treatments, and similar products without a doctor’s note. The same law made menstrual care products, including tampons, pads, and cups, eligible for the first time.5Internal Revenue Service. IRS Outlines Changes to Health Care Spending Available Under CARES Act
OTC products that aren’t medicines but serve a medical purpose, such as bandages, thermometers, and contact lens solution, are also eligible.4FSAFEDS. Frequently Asked Questions – What Kind of Over-the-Counter Medicines or Products Are Eligible
Medical Equipment and Supplies
Durable medical equipment used primarily for medical care qualifies. Crutches, wheelchairs, blood glucose monitors, and test strips are common examples. Breast pumps and their supplies are fully eligible.
The Gray Zone: Dual-Purpose Items
Some items sit between general wellness and medical treatment, and the same product can go either way depending on why you’re buying it. An air purifier bought because you like clean air is not eligible. The same air purifier bought on your doctor’s recommendation to manage severe asthma may be.
The dividing line is a Letter of Medical Necessity, or LOMN. This is a note from your doctor stating that the item treats a specific diagnosed condition. Items that commonly require an LOMN before an FSA administrator will reimburse them include nutritional supplements, exercise equipment, gym memberships, weight-loss programs, air purifiers, and special-formula baby food. Without the letter, plan administrators deny these claims because they look like general health spending.2Internal Revenue Service. Frequently Asked Questions About Medical Expenses Related to Nutrition, Wellness, and General Health
If you think you’ll need an LOMN, get it in writing before you spend the money. The letter should name the condition, describe how the item treats it, and be signed by the prescribing provider. Some administrators require the letter to be renewed each plan year.
What’s Never Eligible
A handful of categories fail the Section 213 test regardless of the circumstances. Knowing them up front saves you from a denied claim later.
Insurance premiums. An FSA cannot reimburse health insurance premiums, life insurance, long-term care insurance, or any other insurance premiums.6FSAFEDS. Frequently Asked Questions This trips people up because long-term care premiums are deductible on your tax return under Section 213, but that deductibility does not extend to FSA reimbursement.
Cosmetic procedures. Any procedure aimed at improving appearance without meaningfully treating illness or affecting body function is excluded. Teeth whitening, elective Botox, and cosmetic facelifts all fail. There’s one exception: cosmetic surgery that corrects a deformity from a congenital abnormality, an accidental injury, or a disfiguring disease qualifies. Breast reconstruction after a mastectomy is the standard example.1Office of the Law Revision Counsel. 26 USC 213 – Medical, Dental, Etc., Expenses
General wellness without a diagnosis. Vitamins, supplements, gym memberships, weight-loss programs, and personal training are personal expenses on their own. They become eligible only when a doctor prescribes them for a specific medical condition and you have an LOMN in hand.
Funeral and burial costs. These sometimes get confused with medical expenses when a final illness precedes them. They never qualify.
Proving It: Documentation and Substantiation
Calling something FSA eligible is only half the battle. The IRS requires every FSA transaction to be verified by someone other than the account holder. Self-certification is not allowed.7Internal Revenue Service. IRS Notice 2006-69 – Substantiation Requirements for Debit Card Transactions
Proper documentation generally means a third-party receipt showing three things: the date of service, the amount you paid, and a description of the item or service. For expenses partly covered by insurance, an Explanation of Benefits from your insurer usually works. For dual-purpose items or anything not obviously medical, expect to submit the LOMN alongside the receipt.
If you use an FSA debit card, some transactions get auto-approved at the point of sale when the system can match a purchase to a known copay amount or when a pharmacy’s inventory system flags an item as FSA-eligible. When the system can’t verify the purchase automatically, your plan administrator will ask for documentation. Fail to provide it in time and the amount gets treated as taxable income, with the administrator typically recovering it from your next paycheck or suspending your card until the claim is resolved.7Internal Revenue Service. IRS Notice 2006-69 – Substantiation Requirements for Debit Card Transactions
The short version: if the expense diagnoses, treats, or prevents disease, or if it affects how your body works, it’s likely FSA eligible. If it just makes you feel healthier in general, it probably isn’t, unless your doctor puts the reason in writing.