Know Your Health Care FSA/HRA Eligible and Ineligible Expenses
Maximize the Value of Your Reimbursement Account – Your Health Care Flexible Spending Account (FSA) and/or Health Reimbursement Account (HRA) dollars can be used for a variety of out-of-pocket health care expenses that qualify as federal income tax deductions under Section 213(d) of the Internal Revenue Code (“IRC”).
- Health Care FSA dollars can be used to reimburse you for medical and dental expenses incurred by you, your spouse or eligible dependents (children, siblings, parents, and other dependents which are defined in your Plan Documents).
- HRA dollars can only be used to pay for eligible medical expenses incurred by employees and their dependents enrolled in the plan.
IMPORTANT: The IRS defines which medical expenses are eligible under a tax-deferred account. Not all expenses are eligible under all plans. An employer may limit which expenses are allowable under their Health Care FSA or HRA plan. If you are unsure of what your Health Care FSA and/or HRA dollars may be used for, please contact your Plan Administrator.
Here is a sample list of expenses currently eligible and not eligible by the Internal Revenue Service (“IRS”) as deductible medical expenses. This list is not necessarily inclusive or exclusive and may be subject to change based on regulations, IRS revenue rulings, and case law. It is solely based on our current interpretation of IRC Section 213(d) and is not intended to be legal advice.
5 New Expenses Now Eligible For Your HSA & FSA Funds
When you participate in a Health Savings Account (HSA) and/or Flexible Spending Account (FSA), you’re able to contribute pre-tax funds for use on hundreds of eligible expenses. Recently, you gained even more flexibility in your ability to save when the CARES Act was signed into law.
This new legislation expanded the list of expenses that are considered eligible by including popular over-the-counter products, which consumers can now purchase with their HSA or FSA without a prescription. This change went into effect on January 1, 2020, and allows over 20,000 new expenses as eligible moving forward. That’s great news for consumers, since the average American shops for over-the-counter medications 26 times each year.
Here are five of the most common expenses that are now eligible to use HSA and FSA funds without a prescription.
Pain relief medications
Headaches. Muscle soreness. Sprains. There are so many reasons to need pain relievers. There are two common types of over-the-counter pain medications: acetaminophen and nonsteroidal anti-inflammatory drugs (NSAIDs), both of which are now among the eligible expenses available from an HSA and FSA.
Cold and flu products
Winter may be behind us, but cold and flu season never really goes away. As much as 20 percent of the U.S. population gets the flu, on average each season. Fortunately, the over-the-counter medicines taken to cope with a severe cough or congestion are now eligible expenses.
Thirty percent of American adults and 40 percent of children suffer from allergies. And the cost of allergies to the healthcare system is estimated at $18 billion. Those who do have allergies can now find relief with their HSA and FSA funds in the form of over-the-counter antihistamines and decongestants.
Heartburn is among the more common afflictions in this country. That’s why Americans spend billions of dollars each year on medicines that treat heartburn. The CARES Act means that these over-the-counter drugs are HSA and FSA eligible without a prescription.
The CARES Act also included menstrual care products as eligible expenses for HSAs and FSAs. Eligible products include tampons, pads and menstrual sponges.
How do I know what qualifies?
- Consumers can simply scan a product bar code right in their mobile app to help determine eligibility as a qualified medical expense. That’s peace of mind with a touch of a button.
- Online shopping for eligible expenses can be done on sites like Health Shopper, FSA Store and HSA store. These sites are dedicated to items that are eligible under pre-tax accounts like FSAs and HSAs.
- Consult the SIGIS site for the complete list of eligible health care/medical products that qualify for purchase with an FSA or HRA payment card.
How it Works
Use the Payment Debit Card: Once retailers have updated their payment systems and inventories consumers can simply use their card to pay for these newly eligible items, but they should still remember to save their receipts in case the purchase needs to be verified later.
Submit a Claim: Consumers can submit claims for reimbursement through their online account or using the mobile app. In addition, they can re-submit previously denied claims for items purchased since January 1, 2020 that are now eligible as part of the CARES Act.
Sample List of Eligible Expenses
BABY/CHILD TO AGE 13
Lead-Based Paint Removal
Tuition: Special School/Teacher for Disability or Learning
Well Baby /Well Child Care
Dentures and Bridges
Exams and Teeth Cleaning
Extractions and Fillings
Eyeglasses and Contact Lenses
Laser Eye Surgeries
Air Purification Equipment*
Arches and Orthotic Inserts
Crutches, Walkers, Wheelchairs
Medic Alert Bracelet or Necklace
Breast Pumps and Lactation Supplies
OB/GYN Prepaid Maternity Fees (reimbursable after the date of birth)
Pre- and Postnatal Treatments
Sample List of Eligible Expenses (Continued)
Hearing Aids and Batteries
Blood Tests and Metabolism Tests
Alcohol and Drug/Substance Abuse (inpatient treatment and outpatient care)
Fertility Enhancement and Treatment
Hair Loss Treatment*
In Vitro Fertilization
Reconstructive Surgery (due to a congenital defect, accident, or medical treatment)
Transplants (including organ donor)
Alcohol and Drug Addiction
Counseling (not marital or career)
Smoking Cessation Programs*
Weight Loss Programs*
Psychiatrist or Psychologist
* Needs a Dr. Referral or Note.
Flex spending cards are essentially the same as debit cards but used only to cover eligible medical expenses. In some cases, FSA holders who wish to access their funds are required to pay an out-of-pocket expense, and then submit receipts to their benefits administrator. Employees get reimbursed once the paperwork is submitted for eligible expenses.