Most FSA participants are familiar with the “traditional” health care expenses that qualify for FSA reimbursement. But there are other eligible expenses that you may not have heard about. Read on to learn more ways to maximize your FSA spending and lower your net healthcare costs.
Flexible spending accounts (FSAs) have been around since the 1970s, when the Internal Revenue Service (IRS) introduced them in response to rising healthcare costs. An FSA is a tax-advantaged, employer-sponsored benefit account used by employees to reimburse themselves for qualified healthcare expenses. A key aspect is that employee contributions are not subject to any payroll taxes. Since the average person in the U.S. pays between 20-40% in payroll taxes, you are effectively keeping 20-40% of the money you set aside in an FSA account. Or to look at it another way, it’s like you are saving 20-40% on purchases made with pre-tax FSA funds.
Not surprisingly, FSAs are one of America’s most popular employer-sponsored benefits. The Bureau of Labor Statistics (BLS) estimates that 46 percent of U.S. civilian workers had access to an FSA plan in 2020.
How can I maximize my FSA spending and benefits?
If participating in an FSA for the first time, you may be surprised at the wide variety of covered products and services. These include common medical expenses, such as doctor visits, lab tests, x-rays, and other medical procedures. FSAs can also be used to pay for prescription medicines and most dental, vision, chiropractic and mental health services.
In addition to these “traditional” healthcare expenses, however, there are other products and services that qualify for FSA reimbursement.
FSA expenses you may not know about
Guide dogs/service animals
FSA plans can reimburse the costs of buying, training, and maintaining a guide dog or other service animal. The animal must be used to assist someone with a diagnosed visual, hearing or other physical disability. Maintenance costs can include food, grooming, and veterinary expenses needed to keep the animal healthy.
Braille reading material
You can claim part of the costs for purchasing Braille books and magazines for a visually impaired person. Specifically, FSAs can reimburse for the difference in price between a book’s regular print edition and the higher-cost Braille edition.
Auto adaptation expenses
Disabled persons who require hand-steering controls and other special equipment in order to drive a vehicle can claim these as FSA-eligible expenses. Qualified costs also include the difference between the cost of a regular car and one designed to hold a wheelchair.
Most modern TVs offer closed-captioning as a built-in feature. However, if your set requires an external adapter to enable closed-captioning, the cost of the adapter qualifies as an FSA expense. In some cases, you can also claim the difference between the cost of a specially equipped television set and one that doesn’t offer closed captioning.
Special telephone equipment
If you or a family member are deaf, hard of hearing, or have a speech disability, you can claim the costs of special equipment that enables you to communicate by telephone. This includes teletypewriters (TTY) and other telecommunications devices (TDD) for the deaf, as well as repair costs to keep the equipment in good working order.
Purchasing a wig qualifies for FSA reimbursement if you have lost part or all of your hair due to disease or medical treatment (such as radiation or chemotherapy).
Smoking cessation programs
Some costs of a professional stop-smoking program qualify as FSA medical expenses. Many over-the-counter (OTC) treatments, like nicotine skin patches and gum, also count as FSA-eligible expenses. Learn more about smoking cessation programs here.
Home improvements, including lead-based paint removal
If you or a dependent are disabled, home improvements to accommodate the disability (known as “capital expenses”) are FSA-eligible. Eligible modifications include changing door hardware and widening doorways, modifying electrical outlets, installing hand rails in bathrooms, and other alterations. Review the IRS guidelines and use their worksheet to help calculate reimbursement amounts.
The cost of removing lead-based paint from your home is also a qualified expense, with the following conditions:
- The surfaces being treated have peeling, cracking or flaking lead-based paint
- A child can easily reach the lead-based paint (for example, you cannot be reimbursed for paint removal from a ceiling)
- Removing the lead-based paint will prevent a child who has (or has had) lead poisoning from eating the paint
Covering lead-based paint with wallboard or paneling instead of removing the paint also qualifies as an eligible capital expense. However, costs incurred to repaint an area after lead-based paint has been scraped away do not qualify for reimbursement.
Transportation costs to and from medical care qualify for FSA reimbursement. These include bus, taxi, train and air fares and ambulance service for the person receiving care, as well as those incurred by a parent who must accompany their child to medical care. Adults unable to travel alone can also claim transportation costs for a nurse or other person to give injections, medications, or other treatment while on the way to receive care. Transportation costs for regular visits to a mentally ill dependent can also qualify for FSA reimbursement if the visits are part of the medical provider’s treatment plan for the patient.
High-tech healthcare gadgets
Many high-tech healthcare gadgets are eligible for FSA reimbursement. These include electronic thermometers, automatic blood pressure readers, appliances designed to help treat acne, and devices to relieve pain, to name just a few.
Believe it or not, sunscreen is FSA-eligible, and not just during the summertime. Harmful ultraviolet (UV) rays do not take a break during cooler months. If you spend a lot of time outdoors, dermatologists recommend wearing sunscreen year-round to protect your skin.
Flu shots and vaccinations
According to the Centers for Disease Control (CDC), flu season is at its peak between December and February. The average person’s immune system takes about two weeks to respond to the flu vaccine, so getting your annual flu shot in October or November is a good idea. Learn more about the benefits of getting a flu shot – and paying for it with pre-tax dollars.
First aid supplies
One can never be too prepared! You never know when you’ll need to give first aid to someone (including yourself). FSA-eligible first aid items include first-aid kits, bandages, gauze, elastic wraps, wound cleansers, disinfectants, and similar items.
Baby care items
Babies need a lot of love and attention. Help care for your bundle of joy with FSA-eligible items such as saline nasal sprays, gas and colic relief supplies, nasal bulbs, and baby movement monitors. Breast pumps and accessories for nursing mothers also qualify for FSA reimbursement.
These are just a handful of suggestions for FSA spending. There are so many ways to use FSA funds. The more you know about qualified expenses, the more money you can save. For a full list of FSA-eligible expenses, see IRS Publication 502 or consult your FSA administrator.