A flexible spending account covers medical expenses you pay out of your own pocket, but only the ones the IRS has approved

A flexible spending account (FSA) lets you set aside pre-tax money from your paycheck to pay for healthcare costs. The catch is that not every healthcare cost qualifies. The IRS maintains a specific list of what counts as a medical expense under an FSA, and that list is narrower than you might expect. You can use FSA money for doctor visits, prescriptions, dental work, and vision care — but not for gym memberships, cosmetic procedures, or most over-the-counter items without a prescription.

The money you contribute reduces your taxable income for the year, which means you pay less in federal income tax and payroll taxes. That's the main financial advantage. But because FSAs operate under "use it or lose it" rules, you need to estimate carefully how much you'll actually spend on covered expenses in the coming year. Any money left over at the end of the plan year typically cannot be carried forward, though some employers offer a grace period or a small carryover amount.

Key Takeaways

  • FSA funds cover doctor visits, prescription medications, dental care, vision care, and medical equipment like crutches or hearing aids, but only if the IRS classifies them as medical expenses.
  • Most over-the-counter medications and health products do not may have access to unless you have a prescription from a doctor, even if they treat a legitimate medical condition.
  • Cosmetic procedures, gym memberships, and general wellness products are never covered, even if they improve your health.
  • Unused FSA money at the end of the plan year is forfeited under standard rules, so you should only contribute what you reasonably expect to spend.
  • You can change your FSA contribution amount only during open enrollment or after a may have access to life event like a birth, marriage, or job loss.

What the IRS considers a may have access to medical expense

The IRS publishes a detailed list of what counts as a medical expense for FSA purposes. The broadest categories are straightforward: doctor visits, hospital stays, surgery, prescription drugs, and dental and vision care all may have access to. You can use FSA money to pay your deductible, copayments, and coinsurance. You can also pay for medical equipment and supplies — crutches, wheelchairs, hearing aids, glucose monitors, inhalers, and bandages all count.

Mental health and substance abuse treatment qualifies, including therapy sessions and inpatient rehabilitation. Certain preventive care services are covered, though the specifics depend on your insurance plan. Chiropractic care, acupuncture, and physical therapy count if a doctor prescribes them. Fertility treatments, including in vitro fertilization, are covered. Nursing care and home health aide services may have access to if medically necessary.

The rule is generally this: if a doctor orders it or prescribes it to treat or prevent a medical condition, it likely qualifies. If you're unsure whether a specific expense is covered, your FSA plan administrator can tell you before you spend the money.

Over-the-counter items: when they may have access to and when they don't

Over-the-counter medications and health products are the source of most FSA confusion. The basic rule changed in 2020: you cannot use FSA money for over-the-counter medications or medical devices unless you have a written prescription from a doctor. That means you can buy ibuprofen, cold medicine, allergy pills, or antacids with FSA funds only if your doctor has written a prescription for them specifically.

Over-the-counter medical supplies — bandages, gauze, thermometers, blood pressure monitors, and similar items — do may have access to without a prescription. The distinction is between a medication (which needs a prescription) and a supply or device (which usually doesn't). If you're buying something at a pharmacy and you're not sure, ask the pharmacist whether it's classified as a medication or a supply.

Sunscreen, toothpaste, and other personal hygiene items do not may have access to, even if they prevent health problems. Vitamins and supplements do not may have access to unless a doctor prescribes them to treat a specific medical condition — and even then, the prescription must be for the supplement itself, not just a general recommendation to take it.

What is never covered, even if it helps your health

Cosmetic procedures and products are never covered, even if they improve your appearance and confidence. That includes teeth whitening, hair removal, wrinkle treatments, and cosmetic surgery. The exception is if a procedure is medically necessary — for example, reconstructive surgery after an accident or burn — but the FSA administrator will need documentation that the procedure treats a medical condition, not just improves appearance.

Gym memberships, fitness classes, and general wellness programs do not may have access to, even if your doctor recommends exercise. Sports equipment and athletic gear are not covered. Weight loss programs and diet supplements do not may have access to unless a doctor prescribes them to treat obesity as a medical condition, and even then, only the medically necessary portion may be covered.

Cosmetic dental work like teeth whitening or veneers does not may have access to. However, dental work that restores function — fillings, crowns, root canals, orthodontia — does may have access to. The line is whether the work treats a dental disease or injury versus improving appearance alone.

How to know what your specific plan covers

FSA rules are set by the IRS, but individual employers can be more restrictive. Your employer's FSA plan document — sometimes called the Summary Plan Description or SPD — spells out exactly what your plan covers. Some employers exclude certain categories that the IRS allows, or they may require additional documentation for borderline expenses.

Your FSA plan administrator (usually a third-party company hired by your employer) maintains a list of covered expenses and can answer questions before you spend money. Most FSA administrators have a website or phone line where you can search for a specific item or submit a question. Getting written confirmation before you buy something expensive is worth the five minutes it takes.

When you submit a claim for reimbursement, the administrator will review it against the plan's rules. If the expense doesn't may have access to, they'll deny the claim and you'll have to pay for it out of pocket. Keeping receipts and documentation is important in case the administrator asks for proof that you actually incurred the expense.

The timing and limits on FSA spending

Most employers set FSA contribution limits based on IRS rules. For 2024, the maximum you can contribute to an FSA is $3,200 per year (this amount changes annually). You contribute through payroll deductions, so the money comes out before taxes are calculated. Your employer may also contribute to your FSA, though this is less common.

You can spend FSA money as soon as the plan year begins, even if you haven't finished paying in all your contributions yet. This is called the "run-out period" — you can submit claims for expenses incurred during the plan year for a limited time after the year ends, usually 60 to 90 days. Check your plan documents for your specific important date.

If you leave your job, you typically lose access to your FSA balance. Some employers offer COBRA continuation, which lets you keep the FSA for a limited time, but you'll pay the full premium yourself. This is one reason to be conservative about how much you contribute — if you leave mid-year, you forfeit the unused balance.

How to use your FSA card and keep records

Most FSAs issue a debit card that you can use at pharmacies, doctors' offices, and other healthcare providers. When you swipe the card, the transaction is typically approved if the merchant is classified as a healthcare provider. However, some transactions — particularly at large retailers like drugstores or supermarkets — may be flagged for review because the merchant sells both covered and non-covered items.

When a transaction is flagged, the FSA administrator will ask you to submit a receipt or explanation of what you bought. You'll need to show that the specific item you purchased qualifies. This is why keeping receipts matters. If you can't prove the expense was covered, you'll have to reimburse the FSA out of pocket.

Some people prefer to pay out of pocket and then submit a claim for reimbursement, which gives you a paper trail and avoids the card-flagging issue. You can request reimbursement for any covered expense you've already paid for, as long as you submit the claim within the plan year's run-out period.

Frequently Asked Questions

Can I use my FSA to pay for my spouse's or child's medical expenses?

Yes, as long as they are your dependents for tax purposes and the expenses are covered under the FSA rules. You can use FSA money to pay for your spouse's prescriptions, dental work, or medical visits. For children, you can use FSA funds until they age out of your tax dependent status, which varies by situation.

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

Under standard FSA rules, unused money is forfeited and returned to your employer. Some employers offer a grace period (usually 2.5 months into the next year) or allow you to carry over a small amount, typically $570. Check your plan documents to see if your employer offers either option.

Can I use FSA money for my pet's medical care?

No. FSA funds are limited to medical expenses for you and your tax dependents. Veterinary care does not may have access to, even if the pet is a service animal. However, if you have a service dog and you need to pay for medical equipment related to your own disability, that equipment may may have access to.

Do I need a prescription for all over-the-counter pain relievers and cold medicines?

Yes, as of 2020. You cannot use FSA funds for over-the-counter medications like ibuprofen or cough syrup unless your doctor has written a prescription for them. Over-the-counter medical supplies like bandages and thermometers do not require a prescription.

Can I change how much I contribute to my FSA during the year?

No, except in specific situations. You can change your contribution amount during open enrollment (usually once a year) or after a may have access to life event like a birth, marriage, divorce, or significant change in your health insurance. Job loss also qualifies as a life event that allows you to adjust your FSA contribution.