Health Care FSA Eligible Expenses
Expenses Associated With the Following:
A
Acupuncture
Adaptive equipment (e.g. raised toilet seat)
Allergy medication
Ambulance fees
Analgesics
Antacids
Anti diarrheal
Antibiotic ointment
Antifungal foot cream
Anti-gas medication
Anti-itch cream/gel
Antiseptic
Asthma relief
B
Bandage tape
Bandages
Blood pressure monitor
Braces (knee, ankle, wrist)
Burn cream
C
Chiropractic services
Chloraseptic sprays
Cold Sore Treatment
Cold/cough medication
Contact lens solution
Contacts
Contraceptives
Co-pays and deductibles
CPAP machine
Crutches
D
Dental services (excludes veneers and other cosmetic procedures)
Diabetes testing supplies
Diabetic supplies
Diaper rash ointment
Doctor visits
Doula services (must be licensed and some postpartum doula expense are excluded)
Drug addiction treatment
E
Ear Wax Removal Kits
Eye drops
Eye exams
F
Fertility treatment
First aid supplies
Flu shots
H
Hearing aid supplies
Hearing aids
Hemorrhoid medication
Home medical equipment
Hormone therapy
Hypnosis
I
Individual Counseling
Ipecac syrup
L
Lab work
Lactose intolerance pills
Lamaze
Laser eye surgery
Laxative
Lice Treatment Products
M
Medical alert bracelet & current year membership fees
Mileage (to receive medical care)
Motion Sickness pills/bracelet
N
Non-cosmetic surgery
Naturopathic Visits
O
Orthodontia
Orthotics
P
Pain relievers
Physical exams
Physical therapy
Parasitic Treatment
Pregnancy test
Prenatal vitamins
Prescription drugs
Prescription glasses
Psychotherapy
R
Reading glasses
Rubbing alcohol
S
Saline Nasal Spray
Service animals
Smoking cessation products
Speech Therapy
Sterilization procedures
Stool softener
Sunscreen SPF 45 or greater (proof of SPF required)
T
Thermometer
Throat lozenges
U
Urinary Tract Infection Treatments
V
Vaccinations
W
Walker
Wart treatment
Wheelchair & repair
X
X-rays
Y
Yeast infection treatment
Acne Treatment - Over-the-counter acne medications are reimbursable if their primary purpose is to treat acne. The cost of normal skin care is not reimbursable. Medical services used to treat acne require an LMN indicating that the procedure is not cosmetic and treats a medical condition.
Air Fare - Amounts paid for transportation primarily for, and essential to, medical care are reimbursable. Proof of medical visit corresponding with the travel is required. Companion travel expenses are not eligible unless necessary due to the patient's medical condition. Transportation expenses must not include a personal element. For example airfare for a two week trip to Hawaii which includes a dentist appointment would not be reimbursable.
Anesthesia - Anesthesia administered for cosmetic procedures or otherwise ineligible expense is not reimbursable.
Automobile - Medical expenses for special hand controls and other equipment installed in a vehicle are reimbursable if used primarily for care. The cost of operating the vehicle is not eligible.
Birthing Classes or Lamaze - The class must address specific medical issues; labor, delivery and breathing techniques. The cost of the ‘mother-to-be’ is eligible; however, the costs of ‘father-to-be’ and/or a coach are not eligible.
Braille Books and Magazines - The cost difference between a regular book or magazine and the braille books/magazines is reimbursable.
Breast Augmentation - Medical costs related to the removal of breast implants that are defective, causing a medical condition, or restorative procedures for cancer patients are reimbursable. Cosmetic procedures such as implants or injections are not reimbursable.
Breast Reduction – Expenses related to a breast reduction are reimbursable only if the procedure is medically necessary and not cosmetic in nature.
Capital Expenses - Expenses for special equipment or improvements to a home are reimbursable if the primary purpose is medical care. For further details, see discussion under the heading "Capital expenses" below.
Chair - The cost difference between a special chair and a normal chair is reimbursable. The chair must be primarily for medical care. Expense requires documentation indicating the cost of three comparables in order to determine the cost difference.
Christian Science Practitioner - Expenses for a Christian Science Practitioner are reimbursable if used to treat a medical condition.
Deductibles - Expenses applied against a medical or dental insurance deductible are eligible. This is not to be confused with a premium, premiums are not eligible.
Dental Services and Products - Expenses for dental services and products are reimbursable. This includes expenses for X-rays, fillings, braces, extractions, dentures, etc. Veneers, teeth whitening and other cosmetic services are not reimbursable. Hygiene products including toothpaste, floss, mouthwash, and toothbrush/sonicare products are not reimbursable.
Elastic hosiery - Hosiery used to alleviate a medical condition is reimbursable.
Fertility Treatment - Medical expenses related to the treatment of infertility, including in vitro fertilization, are reimbursable. Only storage fees for the current plan year are reimbursable. Storage fees for a future plan year are not reimbursable.
Founder’s Fee/Lifetime Care - Part of a life-care fee or "founder's fee" paid either monthly or as a lump sum under an agreement with a retirement home if it is allocable to medical care. The agreement must require a specified fee payment as a condition for the home's promise to provide lifetime care that includes medical care. Advance payments to a private institution for the lifetime care, treatment and training of an employee's physically or mentally impaired dependent upon the employee's death or inability to provide care are reimbursable. The payments must be a condition for the institution's future acceptance of the dependent and must not be refundable.
Guide Dogs - The cost of a guide dog or other animal used by the visually impaired or hearing impaired person is reimbursable. Food and veterinarian cost associated with a dog or other animal are also reimbursable. A letter of medical necessity is required.
Hospital - Expenses incurred at a hospital in-patient or out-patient for laboratory, surgical, and diagnostic services are reimbursable.
Human Guide - Expenses for a human guide are reimbursable. For example, the expense of guiding a blind child to school is reimbursable.
In vitro fertilization - Medical expenses related to the treatment of infertility, including in vitro fertilization, are reimbursable. Storage fees for the current plan year only are reimbursable. Storage fees for a future plan year are not reimbursable.
Legal fees - Legal fees required to receive medical care are reimbursable. Legal assistance must a necessary expense in order to receive the care (e.g. the care could not have been provided without legal assistance). However, any part of a legal fee that is a management fee; for example, a guardianship or estate management fee is not reimbursable.
Lodging and meals - Lodging and meal expenses at a hospital or similar institution are reimbursable if the employee's primary reason for being there is to receive medical care. The cost of lodging not provided in a hospital or similar institution while an employee is away from home is reimbursable if four requirements are met: (1) the lodging is primarily for and essential to medical care; (2) medical care is provided by a doctor in a licensed hospital or other medical care facility; (3) the lodging is not lavish or extravagant under the circumstances; and (4) there is no significant element of personal pleasure, recreation, or vacation in the travel away from home.
The reimbursable amount cannot exceed $50 for each night for each person. Lodging expenses includes companion expenses if that person must travel with the patient. For example, $100 per night may qualify as a medical expense for lodging if a parent is traveling with a sick child.
Meals and lodging expenses incurred away from home for medical treatment that is not received at a medical facility are not reimbursable even if the trip is made on the advice of a doctor.
Medical records - The fees associated with transferring medical records to a new practitioner are reimbursable.
Mileage - Expenses paid for transportation primarily for an essential to the rendition of medical care are reimbursable. The mileage rate is indexed each year for inflation. The cost of tolls and parking may also be reimbursable. Proof of office visit corresponding with the mileage required.
Naturopathic Expenses - Naturopathic doctor visits are reimbursable. Naturopathic medicines (dietary supplements etc.) will require a LMN to be reimbursable.
Nursing Home - The cost of medical care in a nursing home or similar facility for the employee, employee's spouse, or tax dependent is reimbursable. This includes the cost of meals and lodging in the facility if the primary reason for being there is to receive medical care. Qualified long-term care services cannot be reimbursed on a tax-excludable basis through a flexible spending arrangement on or after January 1, 1997. For this purpose, qualified long-term care expenses are defined in Code Section 7702B(c) as: necessary diagnostic, preventive, therapeutic, curing, treating, mitigating, and rehabilitative services, and maintenance or personal care services, which: (A) are required by chronically ill individual, and (B) are provided pursuant to a plan of care prescribed by a licensed health care practitioner. Thus, under the above definition, expenses that are otherwise reimbursable medical expenses may be long-term care expenses. Code Section 7702B(c)(2) defines a "chronically ill individual" to be a person who (among other things) is "certified" by a licensed health care practitioner as being unable to perform at least two activities of daily living for a period of at least 90 days due to a loss of functional capacity.
Optometrist - Optometric services and expenses for eyeglasses and contact lenses required to treat a medical condition are reimbursable. Premiums for contact lens replacement insurance are not reimbursable.
Organ transplants - Payments for surgical, hospital, laboratory and transportation expenses for a prospective or actual donor of a kidney or other organ are reimbursable.
Oxygen - Amounts paid for oxygen or oxygen equipment to relieve breathing problems caused by a medical condition are reimbursable.
Phone - The cost of purchasing and repairing a special telephone that permits a hearing-impaired person to communicate is reimbursable.
Physical Therapy - Amounts paid for physical therapy to treat a medical condition are reimbursable. Payments made to an individual for special exercises administered to a mentally disabled child are also reimbursable.
Psychiatric Care - Expenses for psychiatric care, including the cost of a facility where the dependent receives medical care, are reimbursable.
Sexual Counseling - Expenses for counseling by a licensed medical practitioner to treat a medical condition are reimbursable.
Smoking cessation program - Expenses for participation in a smoking cessation program and prescription and over-the-counter smoking cessation products are reimbursable.
Special foods - the difference in cost between the special food the commonly available "comparable" version of the same product are reimbursable. You must provide the cost of three comparables for us to determine the cost difference. The special foods must be prescribed and consumed primarily to alleviate or treat an illness or disease, and not for nutritional purposes. Diet food or food related to a weight loss program are not "special foods" and are not reimbursable. An example of a special food is gluten free food consumed by person with a gluten protein allergy.
Special home for mentally impaired - The cost of keeping a mentally disabled person in a special home (not the home of a relative) is reimbursable if recommended by a licensed medical practitioner to treat a medical condition.
Special Schools - expenses paid to a special school for a mentally impaired or physically disabled person if the primary purpose for using the school is to treat a medical condition. This includes the cost of a school that:
- Teaches Braille to a visually impaired child
- Teaches lip-reading to a hearing-impaired child
- Provides remedial language training to correct a condition caused by a birth defect
- Schools for autistic children
Meals, lodging, and ordinary education supplied by a special school is reimbursable only if the main reason for using the school is its resources for treating the mental or physical disability. The cost of sending a child without a specific medical condition to a special school to benefit from the course of study or disciplinary methods is not reimbursable.
Sterilization - Expenses related to legal sterilization, including vasectomy and reverse vasectomy, are reimbursable.
Transportation - Expenses for transportation primarily for and essential to medical care are reimbursable. This includes bus, taxi, train or plane fare, ambulance service, parking fees, tolls and expenses of a parent who must accompany a child who needs medical care.
Capital Expenses
Improvements or special equipment installed in the home may qualify for reimbursement if their main purpose is medical care. A LMN is required. The amount reimbursable is reduced by any increase in the value of the property. If the value of the property is not increased by the improvement, the entire cost of the improvement may be reimbursable. If the improvement or modification does not increase the value of the residence then the full cost may be reimbursable. These improvements include, but are not limited to:
- Constructing entrance or exit ramps
- Widening doorways at entrances or exits
- Widening or otherwise modifying hallways and interior doorways
- Installing railing, support bars or other modifications to bathrooms
- Lowering or making other modifications to kitchen cabinets and equipment
- Moving or otherwise modifying electrical outlets and fixtures
- Installing porch lifts and other forms of lifts (but generally not elevators)
- Modifying fire alarms, smoke detectors and other warning systems; modifying stairways
- Adding handrails or grab bars
- Modifying hardware on doors
- Modifying areas in front entrance and exit doorways
- Re-grading the ground to provide access to the residence
Only reasonable costs are considered medical care. Additional costs for personal motives, such as for architectural or aesthetic reasons, are not reimbursable.
Capital Expense Worksheet
The following worksheet may be used to determine the amount of a reimbursable capital expense.
- The cost of the improvement $__________ .
- The increase in the value of the home as a result of the improvement $__________ .
If line 2 is equal to or greater than line 1, the cost of the improvement is not reimbursable. If line 2 is less than line 1, go on to line 3.
- Subtract line 2 from line 1. This amount may be claimed as a medical expense.
Although a capital expense may be reimbursable under Section 213, it is not certain to what extent such an expense may be reimbursable under a health FSA. Rules prohibit as a benefit "deferred compensation." For this purpose, deferred compensation means the use of contributions "from one year to purchase a benefit that will be provided in a subsequent year." Since a capital expenditure by its nature has value over more than one year, reimbursement of such an expense might be considered deferred compensation. The IRS has not provided specific guidance on this point.
Accordingly, the expense may be reimbursed in one of the three following ways: (1) not reimburse the expenditure at all (most conservative); (2) prorate the reimbursement over the useable life of the asset (a middle-ground approach); and (3) reimburse the entire expenditure in the year in which it is acquired (most aggressive).
Operation and Maintenance
If a capital expense qualifies as a reimbursable medical expense, then expenses related to operation and maintenance also qualify as medical expenses, as long as the medical reason for the capital expense still exists. This is so even if none or only part of the original capital expense qualified as a medical care expense.
Improvements to Property Rented By a Person with Disabilities
Improvements to rental property to treat a medical condition are reimbursable if the amount was not reimbursed by the landlord or any other source.
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