FSA funds cover medical expenses your insurance doesn't pay for, plus some items insurance won't touch at all

A Flexible Spending Account (FSA) lets you set aside pre-tax money to pay for may have access to medical, dental, and vision expenses. The IRS publishes a list of what counts, and it's longer than most people think — it includes things like copays, deductibles, prescription glasses, and even some over-the-counter items if a doctor writes a note. The catch is that FSA money is "use it or lose it" — you must spend what you set aside by the end of the plan year, or you forfeit it.

Unlike a Health Savings Account (HSA), an FSA doesn't roll over year to year, and you don't own the account — your employer does. But within the plan year, you have broad freedom to spend on anything the IRS allows, whether your insurance covers it or not.

Key Takeaways

  • FSA money covers copays, coinsurance, deductibles, and prescription costs that your insurance requires you to pay.
  • You can use FSA funds for dental work, vision care, and hearing aids even if your employer's health plan doesn't include dental or vision coverage.
  • Some over-the-counter items like pain relievers, allergy medicine, and first-aid supplies count only if a doctor writes a prescription or note requesting them.
  • You must spend your FSA balance by the end of the plan year or lose the money — there is no rollover to the next year.
  • FSA funds cannot pay for cosmetic procedures, gym memberships, vitamins without a medical reason, or insurance premiums.

Medical expenses your insurance requires you to pay

The most straightforward FSA use is paying the out-of-pocket costs your health insurance plan imposes. This includes copays (the flat fee you pay at a doctor visit), coinsurance (your percentage of the bill after insurance pays its share), and deductibles (the amount you must pay before insurance kicks in).

If you have a $1,500 deductible and you meet it during the year, FSA money can cover that entire amount. The same applies to specialist copays, urgent care visits, or any medical service where you owe money to the provider. You pay with your FSA debit card or submit a receipt for reimbursement.

Prescription medications and over-the-counter drugs

Prescription medications are always FSA-may be able to access, whether or not your insurance covers them. You can use FSA funds at the pharmacy counter to pay your copay or the full cost if you're uninsured.

Over-the-counter drugs are trickier. Basic pain relievers, allergy medicine, cold medicine, and antacids now require a doctor's prescription or a written note from your doctor stating that you need them for a medical condition. A note doesn't mean a full prescription — your doctor can write "Patient needs ibuprofen for arthritis" on a pad, and that qualifies. Insulin is the one exception: you can buy it over the counter with FSA funds without a prescription.

Dental and vision care

FSA funds cover dental work that your employer's dental plan doesn't cover, or all dental work if your employer offers no dental plan at all. This includes cleanings, fillings, root canals, crowns, orthodontia, and extractions. You can also use FSA money for dental implants and dentures.

Vision care works the same way. Eyeglasses, contact lenses, eye exams, and LASIK surgery all count. If your employer offers vision coverage, FSA money can cover your copay or the gap between what insurance pays and what you owe. Hearing aids and hearing tests are also FSA-may be able to access.

Medical equipment and supplies

FSA funds cover durable medical equipment prescribed by a doctor: crutches, wheelchairs, blood pressure monitors, glucose meters, and continuous positive airway pressure (CPAP) machines. You can also use FSA money for bandages, gauze, elastic wraps, and other first-aid supplies.

Pregnancy tests, ovulation kits, and fertility-related supplies count as FSA-may be able to access. So do incontinence products, diabetic supplies, and medical alert systems. The rule is that the item must serve a medical purpose and, in most cases, be recommended or prescribed by a healthcare provider.

What FSA money cannot cover

Cosmetic procedures — including teeth whitening, Botox, hair removal, and plastic surgery — are not FSA-may be able to access unless they're medically necessary (for example, reconstructive surgery after an accident). General wellness items like vitamins, supplements, and gym memberships don't count, even if you take them for health reasons, unless a doctor prescribes them for a specific medical condition.

You cannot use FSA funds to pay insurance premiums, including health insurance, dental insurance, or vision insurance. You also cannot use FSA money for over-the-counter sunscreen, toothpaste, or soap, since these are considered personal hygiene items rather than medical expenses. Marijuana, even in states where it's legal, is not FSA-may be able to access under federal law.

How to track and use your FSA balance

Most employers provide an FSA debit card that you can use at pharmacies, doctor offices, and vision centers. Some require you to submit receipts for reimbursement instead. Check your plan documents or call your benefits administrator to learn which method applies to you.

Keep receipts for everything you buy with FSA funds. If you're audited, the IRS may ask for proof that your purchases were medically necessary. Many people set a phone reminder in November to review their balance and plan how to spend remaining funds before the year ends — common last-minute purchases are glasses, dental work, or a year's supply of prescription refills.

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

FSA money does not roll over to the next year. If you set aside $2,500 and spend only $2,000, you lose the remaining $500. Some employers offer a grace period of up to 2.5 months into the next calendar year to spend the previous year's balance, but this is optional — check your plan to see if yours does.

A few employers offer a limited carryover of up to $610 (the amount changes yearly) instead of a grace period, but this is less common. The best strategy is to estimate conservatively what you'll actually spend, because overestimating costs you money.

Frequently Asked Questions

Can I use FSA money for my spouse or children?

Yes, as long as they are claimed as dependents on your tax return. You can use your FSA to pay for their medical, dental, and vision expenses. The money belongs to your account, but the IRS allows you to spend it on any family member you claim as a dependent.

What happens if I don't spend my FSA balance by the end of the year?

You lose the money. It does not roll over to the next year unless your employer offers a grace period (usually 2.5 months into the next year) or a limited carryover. Check your plan documents to see which option your employer provides.

Can I use FSA funds to pay for therapy or mental health counseling?

Yes. Mental health services, including therapy, counseling, and psychiatric visits, are FSA-may be able to access. You can use FSA money to pay your copay or the full cost if you're seeing an out-of-network provider.

Are over-the-counter pain relievers really not covered without a prescription?

Correct. Since 2020, over-the-counter drugs require a doctor's prescription or written note to be FSA-may be able to access. A simple note from your doctor saying you need the medication for a medical reason is enough — you don't need a formal prescription from a pharmacy.

Can I use FSA money for my pet's medical bills?

No. Veterinary expenses are not FSA-may be able to access because the IRS defines may have access to medical expenses as those for you and your tax dependents, and pets are not considered dependents for tax purposes.