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What are FSA Eligible Expenses?

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  • Written By: Lainie Petersen
  • Edited By: Melissa Wiley
  • Last Modified Date: 26 September 2016
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Flexible spending accounts (FSAs) offer workers tax savings on many health care expenses as well as care for dependents. Employees can request regular payroll deductions not subject to regular payroll taxes that are funneled into an FSA and used to pay for certain covered expenses. FSA eligible expenses can change from year to year, but usually include daycare services for both adults and children, medical supplies, and insurance co-payments. Prescription and many over-the-counter drugs as well as many alternative health treatments that may not be covered by standard medical insurance are also usually eligible.

FSA account funds are often used by employees to assist in paying for the care of children less than 13 years old and dependent adults who are incapable of caring for themselves while the employee is at work. To qualify as FSA eligible expenses, the daycare services must be used by an adult or child who can be declared as a dependent by the employee on his taxes. There are federal limitations on the amount of FSA funds that can be used to pay for these services.

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Many people use their FSA to pay for FSA eligible expenses such as insurance co-payments and deductibles as well as items that are usually not covered by insurance, such as incontinence supplies, crutches, or pedometers. FSA eligible expenses must be for items or services related to the treatment or care of a medical condition, which can range from simple injuries to common allergies to serious conditions such as cancer. Depending on the company that services their FSA plan, employees can either use a debit card to pay for FSA eligible expenses or may have to submit receipts for their purchases and wait for reimbursement. As of 2011, most over-the-counter drugs will require a doctor's note or prescription in order to be considered FSA eligible expenses.

FSA eligible expenses can vary depending on the employer policy as well as the type of insurance coverage held by an employee. Some employers, for example, allow employees to use FSA funds to pay for an adoption. In situations where an employee has a health care savings account, she may be restricted to only having access to a limited FSA, which can only be used to pay for dental work and vision expenses, such as contact lenses, eye exams, and glasses. While some holistic health care treatments, such as acupuncture, may be considered FSA eligible expenses, things like cosmetic surgery, breastfeeding classes, or controlled substances are not.

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