What a Flexible Spending Account covers

A Flexible Spending Account (FSA) lets you pay for certain medical and dependent care costs with pre-tax money — meaning you set aside money before taxes are taken out, which lowers your taxable income. You can use FSA funds for most things your health insurance doesn't cover, plus some things it does. The IRS publishes a specific list of what counts, and it's narrower than many people expect.

The key rule: the expense must be for medical care or dependent care, it must not be something your insurance already paid for, and it must be something you actually incurred — not something you're planning to buy. You cannot use FSA money for cosmetic procedures, gym memberships, or over-the-counter vitamins unless a doctor prescribes them in writing.

Key Takeaways

  • FSA money covers copays, deductibles, prescription medications, and medical equipment like crutches or wheelchairs, but not health insurance premiums or cosmetic procedures.
  • Over-the-counter items like pain relievers, allergy medicine, and bandages are covered only if your doctor writes a prescription for them specifically.
  • Dependent care FSAs cover daycare, preschool, and after-school programs for children under 13, but not tuition for K-12 schools or overnight camps.
  • You must have a receipt or explanation of benefits showing the expense was yours and when it occurred; FSA administrators can ask for proof before reimbursing you.
  • Any money you don't use by the end of the plan year is forfeited — there is no rollover, though some plans offer a short grace period to spend remaining funds.

Medical expenses FSA money covers

FSA funds pay for copays and coinsurance when you see a doctor, dentist, or mental health provider. They cover deductibles you owe before insurance kicks in. Prescription medications are covered, as are insulin, inhalers, and other drugs you need a prescription to obtain.

Medical equipment and supplies count: crutches, wheelchairs, hearing aids, glasses, contact lenses, and the solution to clean them. Dental work including fillings, crowns, and orthodontia is covered. Physical therapy, chiropractic care, and acupuncture are covered if a doctor refers you. Psychiatric and psychological treatment, including therapy and counseling, qualifies.

Pregnancy-related care, including prenatal visits and delivery, is covered. Fertility treatments and medications are covered. Ambulance services and medical transportation count. Prosthetics, orthopedic shoes, and back braces are covered. Cough drops, antacids, and topical ointments are covered without a prescription, but most other over-the-counter medicines require a doctor's written prescription to be reimbursed.

Over-the-counter items: what requires a prescription

Pain relievers like ibuprofen and acetaminophen, allergy medicines, cold medicines, and anti-diarrheal medications are not covered by FSA without a doctor's prescription. The prescription does not need to be filled at a pharmacy — your doctor can write "Patient to use over-the-counter ibuprofen 200 mg twice daily" on a prescription pad, and that document qualifies you to use FSA money for any brand or generic version you buy.

Bandages, gauze, and first-aid supplies are covered without a prescription. Sunscreen is not covered. Toothpaste and toothbrushes are not covered. Vitamins and supplements are not covered unless a doctor prescribes them for a specific medical condition — a general multivitamin does not count.

Keep the prescription with your receipt. FSA administrators increasingly ask for proof that an over-the-counter purchase was prescribed, especially for items like pain relievers that people buy for many reasons.

Dependent care FSA: what it covers

A dependent care FSA is separate from a medical FSA and covers childcare costs. It pays for daycare centers, in-home daycare providers, preschool, and after-school programs for children under age 13. It covers summer day camps and before-school care. The child must live with you and you must claim them as a dependent on your taxes.

Dependent care FSA does not cover tuition for kindergarten through 12th grade, even if the school provides before- and after-school care. It does not cover overnight camps, sports camps, or academic tutoring. It does not cover babysitting for date nights unless the babysitter is a licensed daycare provider (most are not). Adult daycare for an elderly parent or disabled adult does count, as long as they are your dependent.

You need receipts showing the provider's name, the dates of care, and the amount paid. If you use a nanny or in-home provider, you also need their tax ID number or Social Security number.

What FSA money cannot cover

Health insurance premiums — whether for your employer plan, a spouse's plan, or an individual policy — are not covered by FSA. Long-term care insurance premiums are not covered. Cosmetic procedures like teeth whitening, Botox, or elective surgery are not covered, even if a doctor performs them.

Gym memberships and fitness classes are not covered, even if prescribed by a doctor for weight loss or cardiac rehabilitation. Swimming lessons are not covered. Maternity clothes are not covered. Wigs are not covered unless you have hair loss from a medical condition like alopecia or chemotherapy, in which case a doctor's note helps but is not always required.

Pet care, including veterinary bills, is not covered. Travel to receive medical care is not covered. Meals and lodging while receiving treatment are not covered. Marijuana, even in states where it is legal, is not covered by FSA.

How to get reimbursed and what records you need

Most FSA plans issue a debit card that you can use at pharmacies, doctors' offices, and medical suppliers. When you swipe it, the transaction is automatically flagged in the system. Some vendors, like certain pharmacies, are set up so the FSA debit card works without any paperwork. Others require you to submit a claim form with a receipt.

Keep receipts for everything. The receipt should show what was purchased, the date, the amount, and ideally the provider's name and tax ID. An explanation of benefits from your insurance showing what you paid out of pocket also works. If you use the FSA debit card and the transaction is later questioned, you will need to provide the receipt within a set time — usually 30 to 60 days — or the money is deducted from your account.

Some FSA administrators use a system called substantiation, where they randomly request receipts after you use your card. Others request receipts for every transaction. Ask your plan administrator which system applies to you, and keep all receipts for at least three years.

The use-it-or-lose-it rule and grace periods

Money you contribute to an FSA but do not use by December 31 is forfeited. You cannot roll it over to the next year, and you cannot get it back. This is the biggest drawback of FSAs compared to Health Savings Accounts (HSAs), which do allow rollovers.

Some employers offer a grace period — usually 2.5 months into the next year — during which you can spend remaining FSA funds from the previous year. Not all plans offer this, and the length varies. Check your plan documents or ask your benefits administrator whether your plan has a grace period and when it ends.

A few plans offer a carryover of up to $610 (the amount changes yearly) into the next plan year, but this is less common and is at the employer's choice. If your plan does not offer a grace period or carryover, spend down your FSA by mid-December or you lose the money.

Frequently Asked Questions

Can I use FSA money for my spouse's medical expenses?

Yes, if your spouse is covered under your health plan or if you file taxes jointly. You can use FSA funds for any family member you claim as a dependent, plus your spouse even if they are not a dependent. Keep receipts showing the expense was for your spouse.

Does FSA cover dental work and vision care?

Yes. Dental work including cleanings, fillings, root canals, crowns, and braces is covered. Vision care including eye exams, glasses, contacts, and contact solution is covered. Laser eye surgery (LASIK) is covered. Dental and vision insurance do not have to cover the expense for FSA to reimburse it.

What happens if I submit a receipt and the FSA says it's not covered?

You can appeal. Contact your FSA administrator and ask why the expense was denied. If you believe it qualifies under IRS rules, provide additional documentation — a doctor's note, a prescription, or a letter from the provider explaining the medical necessity. If the appeal is denied, you can file a complaint with your employer's benefits department or contact your state insurance commissioner.

Can I use FSA for mental health or therapy?

Yes. Copays and coinsurance for therapy, counseling, and psychiatric care are covered. Medications for mental health conditions are covered. If your insurance requires a referral or prior authorization, FSA covers your share of the cost once treatment is approved.

What if I change jobs mid-year — do I lose my FSA balance?

Yes, in most cases. When you leave a job, your FSA coverage ends and any remaining balance is forfeited. You can continue FSA coverage through COBRA if your employer offers it, but you pay the full premium yourself. Some employers allow you to claim reimbursement for expenses incurred before you left, so ask your former benefits administrator before assuming the money is gone.