FSA money covers medical and dental costs, but not everything your doctor prescribes

A Flexible Spending Account (FSA) lets you pay for certain healthcare expenses with pre-tax dollars, which means you save money on taxes. But the IRS has a strict list of what counts. You can use FSA funds for doctor visits, prescription medications, dental work, and vision care. You cannot use it for gym memberships, cosmetic procedures, or over-the-counter medications unless your doctor writes a prescription for them.

The key rule: the expense must be for diagnosis, treatment, or prevention of a medical condition. If it could be used for general wellness or appearance, it does not may have access to. Your FSA plan documents spell out the exact rules your employer's plan follows, because some employers add their own restrictions on top of the federal list.

Key Takeaways

  • Prescription medications and insulin are covered; over-the-counter drugs are covered only if your doctor writes a prescription for them.
  • Doctor visits, dental work, vision exams, and hearing aids all may have access to, but cosmetic procedures and gym memberships do not.
  • You can use FSA funds for medical equipment like crutches, wheelchairs, and blood pressure monitors, but not for general health products like vitamins.
  • Your employer's FSA plan may have its own restrictions beyond the federal rules, so check your plan documents or call your benefits administrator.
  • FSA funds do not roll over to the next year, so you must spend what you set aside or lose it.

Prescription medications and insulin

Prescription drugs are the most straightforward FSA expense. Any medication your doctor prescribes and you pick up at a pharmacy qualifies. This includes insulin for diabetes, inhalers for asthma, antibiotics, blood pressure medications, and psychiatric medications. You pay with your FSA debit card or submit a receipt for reimbursement.

Over-the-counter medications are trickier. Aspirin, cold medicine, allergy pills, and antacids do not may have access to unless your doctor writes a prescription for them. A prescription for ibuprofen or acetaminophen is rare but possible; if your doctor writes one, you can use FSA funds. Many people do not realize this rule and try to use FSA cards at the pharmacy for over-the-counter items, only to have the transaction declined.

Doctor visits, lab work, and medical equipment

Office visits to your primary care doctor, specialists, urgent care, and emergency rooms all may have access to. So do lab tests, X-rays, ultrasounds, and other diagnostic imaging. If your doctor orders it for medical reasons, you can pay for it with FSA funds.

Medical equipment and supplies also may have access to: crutches, wheelchairs, blood pressure monitors, glucose meters, test strips, bandages, and compression stockings. Hearing aids and batteries for hearing aids are covered. Canes, walkers, and braces may have access to. The item must be used to treat or manage a medical condition, not for general health or comfort.

Vitamins and supplements do not may have access to, even if your doctor recommends them. The IRS treats them as general health products, not medical treatment. The same applies to protein powders, meal replacement shakes, and other nutritional products, even if prescribed for a medical reason.

Dental and vision care

Dental work is one of the largest FSA expenses for many people. Cleanings, fillings, root canals, crowns, extractions, and orthodontics all may have access to. You can use FSA funds for braces, retainers, and the dentist's portion of dental implants. Teeth whitening does not may have access to because it is cosmetic, not treatment for a dental disease.

Vision care includes eye exams, glasses, contact lenses, and contact lens solution. Laser eye surgery (LASIK) qualifies. Sunglasses do not, even if they are prescription, because they are considered general eyewear rather than medical treatment.

Mental health and therapy

Therapy sessions with a licensed therapist, psychologist, or psychiatrist may have access to. You can use FSA funds to pay the therapist's fee or your copay or coinsurance. Psychiatric medications are covered under the prescription drug rules. Inpatient mental health treatment and rehabilitation programs also may have access to.

Self-help books, meditation apps, and wellness coaching do not may have access to, even if they address mental health. The expense must come from a licensed healthcare provider.

Dependent care is separate from medical FSA

Some employers offer a separate Dependent Care FSA (also called a Dependent Care Flexible Spending Account) alongside a medical FSA. These are two different accounts with different rules. A Dependent Care FSA pays for childcare, preschool, and adult daycare so you can work. It does not pay for medical expenses.

If your employer offers both, you set aside money for each separately, and the money does not move between accounts. Medical FSA funds cannot pay for daycare, and Dependent Care FSA funds cannot pay for doctor visits. Check your benefits materials to see which accounts your employer offers.

What does not may have access to

Cosmetic procedures do not may have access to unless they are reconstructive after an injury or illness. Botox, facelifts, and teeth whitening are cosmetic. Reconstructive surgery after a car accident or burn would may have access to. Hair transplants do not may have access to. Gym memberships, fitness classes, and exercise equipment do not may have access to, even if prescribed by a doctor for weight loss or heart health.

Toiletries and general health products do not may have access to: toothpaste, soap, shampoo, deodorant, and sunscreen are not FSA-may be able to access. Maternity clothes do not may have access to. Wigs do not may have access to unless they are needed because of hair loss from a medical condition like alopecia or chemotherapy. Marijuana and cannabis products do not may have access to under federal law, even in states where they are legal.

Frequently Asked Questions

Can I use my FSA to pay my health insurance premium or deductible?

No. FSA funds cannot pay your monthly insurance premium or your deductible. However, they can pay your copays, coinsurance, and out-of-pocket costs once you have met your deductible. Some employers allow FSA funds to pay for COBRA continuation coverage, but this is rare — check your plan documents.

What happens if I do not spend all my FSA money by the end of the year?

FSA funds do not roll over. Money you do not spend by December 31 is forfeited. Some employers offer a grace period (usually 2.5 months into the next year) or a carryover of up to $610 per year, but this is optional. Check your plan to see if either applies. This is why many people set aside a conservative amount.

Can I use my FSA card at any pharmacy or doctor's office?

Your FSA debit card works at most pharmacies and medical providers, but not all. Some smaller practices or specialty pharmacies may not accept it. You can always pay out of pocket and submit a receipt to your FSA administrator for reimbursement. Keep receipts for at least three years in case of an audit.

Does my FSA cover my spouse or children?

Yes, if they are covered under your health insurance plan. You can use FSA funds for your spouse's and children's medical, dental, and vision expenses. You cannot use it for a dependent who is not on your insurance plan.

Are over-the-counter COVID tests and masks covered?

Yes. The IRS expanded FSA coverage to include over-the-counter COVID-19 tests, masks, and hand sanitizer without requiring a prescription. This is an exception to the usual over-the-counter rule. Check your plan documents to confirm your employer's plan includes this coverage.