What a Flexible Spending Account actually covers
A Flexible Spending Account (FSA) lets you pay for certain medical and dependent care costs with pre-tax money — meaning the money comes out of your paycheck before taxes are calculated. The IRS sets the rules about what counts, and the list is narrower than many people expect. You cannot use FSA funds for groceries, gym memberships, cosmetic procedures, or most over-the-counter items without a prescription.
The specific items you can use FSA money for fall into two categories: medical expenses and dependent care. Your employer chooses which type of FSA to offer, or sometimes both. Medical FSAs cover healthcare costs you would pay out of pocket. Dependent care FSAs cover childcare or adult care expenses while you work.
What counts depends partly on whether you have a prescription or a doctor's order. Some items — like insulin or prescription glasses — are always covered. Others — like certain pain relievers or allergy medications — are only covered if your doctor writes a prescription for them, even if the same product is sold over the counter.
Key Takeaways
- Medical FSA funds cover doctor visits, prescriptions, dental work, vision care, and medical equipment, but not over-the-counter medications unless prescribed by a doctor.
- Dependent care FSA funds pay for childcare, preschool, and adult daycare while you work, but not for school tuition or overnight camps.
- You cannot use FSA money for cosmetic procedures, gym memberships, vitamins, or general wellness products unless a doctor prescribes them for a specific medical condition.
- FSA funds must be used in the calendar year you set aside the money, or you lose what you do not spend — there is no rollover to next year.
Medical expenses covered by a health FSA
A medical FSA covers out-of-pocket costs related to diagnosis, treatment, or prevention of disease. This includes doctor and dentist visits, prescription medications, mental health counseling, physical therapy, and medical equipment like crutches, wheelchairs, or hearing aids. You can also use FSA funds to pay your insurance deductible, copays, and coinsurance.
Vision and dental care are fully covered. You can use FSA money for eye exams, glasses, contact lenses, contact lens solution, and dental cleanings, fillings, crowns, and orthodontia. Hearing aids and hearing aid batteries also may have access to.
Over-the-counter items require more caution. Allergy medications, pain relievers, cold medicines, and antacids are covered only if your doctor writes a prescription for them. Vitamins and supplements are not covered unless a doctor prescribes them to treat a specific medical condition — a general multivitamin does not count. Sunscreen, toothpaste, and first-aid supplies like bandages are not covered.
Some items sit in a gray area and depend on your plan or how the expense is documented. Certain medical equipment — like blood pressure monitors, thermometers, or glucose meters — may be covered, but you should check with your plan administrator before buying. Fertility treatments, including some medications and procedures, are often covered, but coverage varies by plan.
Dependent care FSA: what childcare and elder care costs may have access to
A dependent care FSA pays for care services that allow you to work. This includes daycare centers, in-home childcare providers, preschool (but only the care portion, not educational tuition), after-school care, and summer day camps. You can also use dependent care FSA funds to pay for adult daycare if you are caring for an aging parent or disabled adult.
The care must be for someone you claim as a dependent on your taxes, and it must be necessary for you to work. If you are married, both spouses must be working or in school full-time for the expense to count. The caregiver cannot be your spouse, a child under 19, or someone you claim as a dependent on your taxes.
Overnight camps, boarding schools, and school tuition do not count, even if they include meals and housing. Babysitting for a night out or vacation does not count either — the care must be tied to your work schedule. If you work part-time, you can only set aside FSA funds for the hours you actually work.
Items that look medical but do not may have access to
Cosmetic procedures and products are not covered, even if they improve your appearance in ways that affect your confidence. Teeth whitening, Botox, hair removal, and cosmetic surgery do not may have access to. The exception is if a procedure is medically necessary — for example, reconstructive surgery after an accident or burn.
General wellness products are not covered. Gym memberships, fitness classes, diet programs, and weight-loss supplements do not count. Maternity clothes, baby formula, diapers, and baby wipes are not covered. Medications for minor conditions that do not require a prescription — like over-the-counter cold medicine or pain reliever — do not count unless your doctor prescribes them.
Some items that sound medical are actually personal care. Deodorant, shampoo, conditioner, and soap are not covered. Toilet paper and paper towels are not covered. Feminine hygiene products are not covered. Hand sanitizer and disinfectant wipes are not covered.
How to know what your specific plan covers
Your employer's FSA plan document lists what is and is not covered under your account. The rules are set by the IRS, but individual plans can be more restrictive. Some employers exclude certain items that the IRS technically allows. Your plan administrator or human resources department can answer questions about your specific account.
When you are unsure about an item, ask before you buy. Keep your receipt and any documentation — like a prescription or a letter from your doctor explaining medical necessity — in case your plan asks for proof. Some FSA debit cards will reject a purchase at the register if it does not meet IRS rules, but not all do, and some items slip through. If you use FSA funds for something that does not may have access to, you may have to repay the money.
Your FSA plan administrator can also tell you whether your plan allows you to carry over a small amount of unused funds to the next year. As of 2024, some plans allow a carryover of up to $640, but many do not. If your plan does not allow carryover, any money you do not spend by December 31 is forfeited.
Frequently Asked Questions
Can I use my FSA debit card at any pharmacy or doctor's office?
Most FSA debit cards work at pharmacies, doctor's offices, and medical supply stores that accept debit cards. However, not every store is set up to process FSA transactions. Some smaller practices or independent pharmacies may not accept FSA cards. You can always pay out of pocket and then request reimbursement from your FSA plan if you have the receipt and documentation.
What happens if I use my FSA for something that does not may have access to?
If your plan catches the error, you may be asked to repay the money to the FSA. If you do not repay it, the amount may be treated as taxable income, and you could owe taxes on it. Keep receipts for everything you buy with your FSA card so you can prove the purchase was for a covered expense if your plan questions it.
Can I use FSA money for my spouse's medical expenses?
Yes, if your spouse is covered under your health insurance plan or if you file taxes jointly. You can use your medical FSA to pay for your spouse's out-of-pocket medical costs, including deductibles, copays, and prescriptions. Your spouse does not need to be on your FSA account — you just need to be able to claim the expense on your taxes.
Do I need a receipt to use my FSA funds?
You should keep receipts for all FSA purchases. Your plan administrator may ask for proof that an expense qualifies, especially for items that are sometimes covered and sometimes not. If you cannot provide documentation, you may have to repay the FSA. Receipts also help you track how much you have spent and how much you have left for the year.
Can I use FSA money for my pet's medical care?
No. Veterinary expenses and pet care do not may have access to for FSA funds. The IRS limits FSA coverage to medical care for you and your tax dependents, which does not include pets. Pet insurance and veterinary bills must be paid with after-tax money.