FSA covers medical costs 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 medical expenses out of pocket. The IRS publishes a list of what counts as a medical expense, and it's broader than most people think — it includes not just doctor visits and prescriptions, but also dental work, vision care, medical equipment, and certain over-the-counter items. The catch is that FSA money is "use it or lose it" — anything you don't spend by the end of the plan year (usually December 31) goes back to your employer, though some plans offer a grace period or carryover of up to $610.

The key difference from an HSA is that FSA money doesn't roll over year to year, so you need to estimate carefully what you'll actually spend. But for the year you're using it, FSA money can cover a wider range of things than you might expect, including items that health insurance simply won't pay for.

Key Takeaways

  • FSA covers doctor visits, prescriptions, dental work, vision care, and medical equipment that your insurance doesn't fully cover.
  • Many over-the-counter items count as FSA-may be able to access if they treat a specific medical condition — pain relievers, allergy medicine, and antacids may have access to, but vitamins and supplements generally do not.
  • You must spend FSA money within the plan year or lose it, so estimate conservatively based on what you know you'll need.
  • Some items like sunscreen, cosmetic procedures, and general wellness products are never FSA-may be able to access, even if they relate to health.

What counts as a medical expense under FSA rules

The IRS defines FSA-may be able to access expenses as costs for diagnosis, cure, mitigation, treatment, or prevention of disease, or for treatments affecting any part of your body's structure or function. This is broader than "things a doctor prescribes." It includes copays and coinsurance you owe after insurance pays its share, deductibles, and the full cost of services your plan doesn't cover at all.

may be able to access categories include doctor and dentist visits, prescription medications, eyeglasses and contact lenses, hearing aids, crutches, wheelchairs, blood pressure monitors, glucose meters, and pregnancy tests. Mental health care — therapy, counseling, and psychiatric medications — also qualifies. If you're paying out of pocket for any of these, FSA money can cover it.

Over-the-counter items that FSA covers

Over-the-counter medications and supplies are FSA-may be able to access if they treat a diagnosed or symptomatic medical condition. Pain relievers like ibuprofen and acetaminophen count. Allergy medicine, cold medicine, antacids, anti-diarrheal medication, and topical creams for rashes or eczema all may have access to. Bandages, gauze, first-aid tape, and other wound-care supplies are may be able to access. Feminine hygiene products — pads and tampons — became FSA-may be able to access in 2020.

The rule is that the item must address a specific health problem, not general wellness. Vitamins and supplements are not FSA-may be able to access unless your doctor prescribes them to treat a deficiency or medical condition. Sunscreen is not may be able to access because it's considered preventive cosmetic care, not treatment of disease. Toothpaste and mouthwash are not may be able to access, but dental work itself is.

Medical equipment and supplies FSA will pay for

FSA covers the cost of medical equipment prescribed or recommended by a doctor. This includes blood pressure cuffs, thermometers, pulse oximeters, glucose monitors and test strips, lancets, continuous glucose monitors, insulin pumps, and EpiPens. Crutches, canes, walkers, wheelchairs, and other mobility aids are may be able to access. Heating pads, ice packs, and compression sleeves used to treat a specific injury or condition count.

Dental and vision equipment also qualifies: eyeglasses, contact lenses, contact lens solution, and hearing aids. Orthopedic shoes and inserts prescribed for a foot condition are may be able to access, but regular shoes are not. If you're unsure whether a piece of equipment counts, check with your FSA plan administrator or the vendor — many medical supply companies know the rules and can tell you whether an item is FSA-may be able to access before you buy.

What FSA does not cover

FSA does not cover cosmetic procedures or products, even if they improve appearance in a way that affects confidence. Botox, teeth whitening, hair removal, and cosmetic surgery are not may be able to access. General health and wellness products — vitamins, supplements, protein powders, fitness equipment, gym memberships — are not covered unless prescribed by a doctor for a specific medical reason.

Toiletries and personal care items are not FSA-may be able to access: toothpaste, mouthwash, shampoo, soap, deodorant, and razors do not may have access to. Over-the-counter items that are not medications or medical supplies — like tissues or hand sanitizer — are not may be able to access. Marijuana and cannabis products, even in states where they're legal, are not FSA-may be able to access under federal tax law. Cosmetic contact lenses (colored or decorative) are not covered, though prescription contact lenses are.

How to know if something is FSA-may be able to access before you buy

Your FSA plan administrator provides a list of may be able to access expenses, and most plans have a searchable database on their website or app. If you're buying from a pharmacy or medical supply company, ask the cashier or check the receipt — many retailers flag FSA-may be able to access items at checkout. Some online retailers like Amazon let you filter for FSA-may be able to access products.

When in doubt, ask your plan administrator before you spend the money. They can give you a yes or no answer and often provide it in writing, which protects you if the IRS ever questions the expense. Keep receipts for everything you buy with FSA money — you may need to show proof that the item was medically necessary if your plan asks for documentation.

The "use it or lose it" rule and how to plan spending

FSA money that you don't spend by the end of the plan year is forfeited — your employer keeps it. This is why estimating your annual spending matters. Look at what you spent on medical, dental, and vision care last year, add any planned expenses (like a dental crown or new glasses), and set aside that amount. Be conservative: it's better to leave money in your paycheck than to lose FSA funds.

Some employers offer a grace period (usually two and a half months into the next year) to spend the previous year's FSA money, or they allow you to carry over up to $610 to the next year. Check your plan documents to see if either applies to you. If your plan has neither, spend down your FSA balance before December 31 by scheduling dental or vision appointments, buying medical supplies you know you'll need, or filling prescriptions early.

Frequently Asked Questions

Can I use FSA money for my spouse or children?

Yes. FSA money can pay for medical expenses for you, your spouse, and any dependent children, regardless of whether they're on your health insurance plan. You can use FSA funds for their doctor visits, prescriptions, dental work, and medical equipment.

Does FSA cover therapy or mental health counseling?

Yes. Therapy, counseling, and psychiatric care are FSA-may be able to access. This includes copays for therapy sessions and the full cost if you pay out of pocket. Psychiatric medications are also covered.

Can I use FSA for prescription glasses or contact lenses?

Yes. Eyeglasses, contact lenses, and contact lens solution are all FSA-may be able to access. The exam itself is also covered. Cosmetic contact lenses (colored or decorative) are not may be able to access, but prescription lenses are.

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

The unused money is forfeited and returned to your employer — you lose it. Some plans offer a grace period or carryover option, so check your plan documents. If neither applies, spend down your balance before the deadline or adjust your contribution for next year.

Is FSA money taxed?

No. FSA contributions are taken from your paycheck before taxes, which lowers your taxable income for the year. The money you withdraw to pay for may be able to access medical expenses is not taxed. This is the main advantage of FSA over paying out of pocket.