Flexible spending accounts (FSAs) are one of the best-kept secrets of personal finance. By reserving part of your income for healthcare-related expenses, you can better plan for the future while lowering your tax bill as well.
Of course, the term “healthcare” covers a wide range of products and services—some of which may surprise you. The good news is that there are a wide variety of FSA-eligible expenses, as defined by the IRS. Below, we’ll discuss 16 creative, unconventional, and totally legal ways for you to spend the money that you’ve saved in an FSA.
What is a Flexible Spending Account (FSA)?
An FSA (flexible spending account) is a spending account set up by an employer that can be used to pay for various medical and health-related expenses.
The greatest benefit of an FSA is that it can be used to save employees’ pre-tax income, which helps you reduce your tax obligations at the end of the year. Medical, dental, and vision expenses are all eligible to be paid by an FSA. What’s more, FSAs can be used to pay for the healthcare expenses of you, your spouse, or your dependents.
Beginning in January 2020, the IRS will raise the FSA saving limit to $2,750 per person per year. In most cases, the money saved in an FSA must be spent within the calendar year, although you can carry over up to $500 in unused funds into the subsequent year.
What Items are FSA-Eligible Expenses?
The IRS defines the term “medical expenses” as follows:
“Medical expenses are the costs of diagnosis, cure, mitigation, treatment, or prevention of disease, and for the purpose of affecting any part or function of the body. These expenses include payments for legal medical services rendered by physicians, surgeons, dentists, and other medical practitioners. They include the costs of equipment, supplies, and diagnostic devices needed for these purposes.”
The following healthcare expenses are among those eligible for FSA spending:
- Prescription medications
- Over-the-counter (OTC) medication with a doctor’s note
For example, you can get an FSA reimbursement when you purchase OTC medicine for allergies, cold, and flu, as long as it’s accompanied by a prescription. Other eligible over-the-counter purchases include bandages, first aid kits, and thermometers.
These FSA expenses make sense and are fairly obvious, but others are a little more unorthodox. Below, you’ll find 16 surprising FSA-eligible expenses that you can spend the money in your FSA on—including hearing aids.
16 Shocking FSA-Eligible Expenses (Including Hearing Aids)
With thousands of dollars potentially saved in an FSA, it’s important that you don’t let these funds go to waste every year. The 16 FSA-eligible expenses below will help you make the most of the money you’ve saved.
Note that all of these expenses will require detailed receipts in order to be reimbursed. In addition, some of these expenses will need extra documentation in the form of a doctor’s prescription or a letter of medical necessity.
1. Transportation primarily for medical care
Any transportation that you take in order to travel to and from essential medical care can be paid for from your FSA.
This includes bus, taxi, and train fares, and even airfare to see an out-of-state medical specialist. You can also pay for the expenses of a parent traveling with an underage patient seeking medical care, as well as a nurse who must provide the patient with medications or injections.
If you are driving to and from medical care, you can pay for expenses such as gasoline and oil with your FSA, as well as the costs of parking and tolls. However, you can’t use your FSA to pay for car repairs, car insurance, or general depreciation costs.
2. Home improvement
If you or another member of your household has a temporary or permanent medical issue, you can use your FSA to pay for home improvements whose main purpose is medical care. According to the IRS, these modifications may include:
- Building wheelchair ramps for your home.
- Widening doorways and hallways.
- Adding railings and support bars.
- Modifying parts of the home such as kitchen cabinets and electrical outlets for easier access.
However, the IRS specifies that these improvements should not usually increase the home’s value. For example, elevators are not usually considered an FSA-eligible expense, because they increase the home’s value for people without disabilities as well.
FSAs can also be used to pay for the costs of removing lead-based paint from your home, if a child in the home has or had lead poisoning. The IRS clarifies that the paint “must be in poor repair (peeling or cracking) or within the child’s reach.” However, the costs of repainting are not included.
3. Car modifications
Similarly, you may be able to include modifications to your vehicle, such as special hand controls for disabled drivers, under your FSA-eligible expenses.
If you purchase a new car for a wheelchair user, your FSA can also pay for the additional cost of buying a wheelchair-compatible vehicle, rather than a standard vehicle.
4. Service animals
Service animals such as guide dogs are eligible for FSA expenses. This includes a wide range of expenses: both the initial costs of purchasing and training the animal, as well as necessary maintenance costs such as food and veterinary care.
5. Air conditioning
People with allergies and respiratory illnesses are often extremely sensitive to the air quality and air temperature inside their home. For these reasons, they may use air purifiers or air conditioners with a specialized filter that removes dust, particulate matter, and other allergens.
To receive FSA reimbursement for an air conditioner or air purifier purchase, you must be able to prove that the device’s primary purpose is to treat or alleviate a medical condition. Air conditioners for general use aren’t covered under FSA spending.
6. Birth control and family planning
Hormonal birth control and other contraception methods are an important part of sexual health. The IRS allows you to pay for birth control pills, adhesive patches, and intrauterine devices (IUDs) with your FSA. Other FSA-eligible expenses related to birth control and family planning include condoms, pregnancy test kits, and medical abortions.
7. Fertility treatments
Fertility treatments are eligible to be classified as FSA expenses. The forms of fertility treatment include in vitro fertilization (IVF), assisted reproductive technology (ART), and artificial insemination, as well as medications that enhance fertility.
In certain cases, the costs of egg donation and storage are also reimbursable with a doctor’s letter of medical necessity. However, the costs of sperm storage cannot be paid for with an FSA.
8. Breastfeeding products
The American Academy of Pediatrics recommends that children be breastfed for the first six months of their lives. New mothers need to ensure the health of their babies by feeding them adequately, which is why breastfeeding products are FSA-eligible.
These products include:
- Breast pumps
- Breast pump bustiers
- Breast milk storage bottles or bags
- Breastfeeding classes
9. Sun protection products
Prolonged exposure to ultraviolet (UV) light is known to be a major cause of skin cancer. The Skin Cancer Foundation estimates that 1 in 5 Americans will develop skin cancer before the age of 70.
Skincare products that protect your skin from the sun’s harmful UV rays are therefore an FSA-eligible expense. These products should have an adequate SPF (sun protection factor) and be primarily used for sun protection (i.e., suntan lotion without sunscreen is not eligible).
The FSA-eligible products for sun protection include:
- Sunscreen (including sunscreen for children, sunscreen for wet skin, and sunscreen with insect repellent)
- Prescription-strength sunglasses
- Lip balm (with an SPF of 15 or greater)
- Sunburn creams and ointments (with a prescription)
10. Alternative medicine
Are you a believer in alternative medicine such as acupuncture, osteopathy, or Christian Science? Do you see a chiropractor when your back is hurting? Some (but not all) forms of alternative medical treatment are eligible for FSA expenses.
The list of FSA-eligible alternative healing methods includes:
- Naturopathy and acupuncture
- Energy therapy
11. Addiction treatments
If you, your spouse, or your dependent is struggling with addiction, the good news is that the cost of treatment may be reimbursable with your FSA.
FSA-eligible expenses related to addiction include:
- Psychologists, psychoanalysis, and psychiatric care
- Alcoholics Anonymous meetings
- Drug addiction treatment and counseling (including detoxification and self-help groups)
- Rehab centers
- Halfway houses
12. Personal trainers and dietitians
No, you can’t get an FSA reimbursement for a personal trainer so that you can be motivated to go to the gym in the mornings. However, with a letter of medical necessity from a doctor, personal trainers are FSA-eligible expenses in certain cases. This may include extreme obesity, diabetes management, or any situation in which it may help treat a medical condition.
Similarly, you can use your FSA to pay for the costs of dietitians and nutritionists—not to help you lose those pesky 10 pounds, but to help treat a specific diagnosed medical condition.
Hair loss occurs due to a variety of conditions, such as thyroid disease and alopecia areata. It can also happen as a side effect of chemotherapy, which is used to treat cancer and other serious illnesses.
Regardless of its cause, hair loss can be psychologically traumatic for those afflicted. The IRS allows FSAs to reimburse the cost of wigs, based on the recommendation of a medical professional who believes that it will help the patient’s mental health.
Yoga has its roots in ancient India, but it’s now practiced by millions of people around the world for its physical and mental benefits. Various studies have shown that yoga may help lower stress and reduce practitioners’ risk of high blood pressure. You can reimburse yoga-related expenses with a letter of medical necessity saying that it will help treat, mitigate, or prevent a medical condition.
15. Books in braille and audiobooks
Does your household include a book lover who reads in braille or who listens to audiobooks? Good news: you can use your FSA to pay for the excess cost of purchasing books in braille or audiobooks, beyond the standard price of a printed book.
16. Hearing aids
Last but certainly not least, hearing aids and related expenses can be paid for with an FSA. This includes the cost of the hearing aids themselves, as well as all required supplementary costs such as hearing aid batteries, repairs, and maintenance. Roughly 29 million people in the U.S. could benefit from wearing hearing aids, which makes this a great advantage of FSAs.
What About FSA-Ineligible Expenses?
The range of expenses covered by FSAs is quite broad, as we’ve proven in the section above. However, they do have their limits: FSAs can’t be used to pay for every possible expense related to health, wellness, and beauty.
Some of the expenses that aren’t eligible for FSA spending are:
- Insurance premiums: In most cases, FSAs only cover insurance copays and deductibles, not your monthly premium.
- Cosmetic surgery: Nose jobs, teeth whitening, hair transplants, and tummy tucks may help you feel better about your appearance, but you’ll have to pay for them with your post-tax dollars.
- Adoption fees: You can pay for adoption-related medical expenses with an FSA, but the costs of the adoption itself aren’t eligible.
- Babysitting and childcare: If your child is healthy, then you can’t pay for the costs of babysitting and childcare with an FSA—even if you, your spouse, or a dependent will receive medical treatment during this time.
- Family or marriage counseling: It may help keep your household together, but family and marriage counseling aren’t eligible for FSA expenses.
- CBD products: Cannabidiol (CBD) and medical marijuana are legal in many states, but still in a gray area on the federal level. This means they aren’t eligible for FSA expenses.
- General dental and hygiene products: Brushing your teeth twice a day may help keep the cavities away, but items like toothpaste, toothbrushes, mouthwash, and dental floss still aren’t eligible for FSA expenses. Neither are lotions, soap, or feminine hygiene products.
- Some training and education programs: Classes on some health-related topics like CPR may help you save a life, but the IRS doesn’t consider them healthcare-related expenses.
We’ve shown throughout this article that “flexible spending accounts” truly live up to their name. From taxi rides and service animals to hearing aids and alternative medicine, FSAs give you the flexibility to spend your hard-earned money on a wide variety of medical expenses.
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