Consumers have been shopping for everything from clothing to groceries to furniture through online retailers for years. It’s convenient, and prices may be lower than those at brick-and-mortar retail stores. More and more, people are turning to the web to buy healthcare products. Many retailers sell FSA-eligible products online, and Flexible Spending Account (FSA) participants can use their account-linked debit cards as payment.
What to Know When FSA Shopping Online
Before shopping online with your FSA, knowing how the accounts work and what products are FSA-eligible is essential.
FSAs are employer-sponsored benefit accounts in which workers contribute pre-tax money for out-of-pocket healthcare costs for themselves and their families. Contributions come from employees’ payroll deductions, and a third-party administrator (TPA) usually manages the accounts. Account holders can withdraw the money anytime during the year for eligible purchases until the available balance has been used.
If you have an FSA, the savings come from not paying taxes on the money you deposit into your account. Therefore, the more you contribute to your FSA, the more significant your savings. Learn more about this year’s contribution limits.
Whether bought in a traditional store or an online FSA shop, FSA funds can only pay for eligible healthcare products and services. So, let’s take a quick look at some examples.
What products and services are eligible?
The IRS has established specific regulations governing what is and is not an FSA-approved expense. Fortunately, there are hundreds of qualified healthcare products and services. These include medicines, prescription drugs, various over-the-counter medications, and medical supplies, such as blood sugar test kits, bandages, and crutches. Or you can use FSA funds to pay for healthcare deductibles, copayments, and coinsurance.
Your FSA covers a wide range of commonly used healthcare products. These include:
- First aid supplies (bandages, first aid kits, etc.)
- Contact lens solution and cases
- Shoe inserts
- Orthopedic braces
However, you may be surprised to learn what does and does not qualify as an FSA-eligible expense. The IRS generally looks favorably at products and services that treat health problems. Specifically, approved items and services must pay for “diagnosis, cure, mitigation, treatment, or prevention of disease, and for the purpose of affecting any part or function of the body.” This can include alternative treatments such as acupuncture and chiropractic treatments.
The IRS looks less favorably on what they consider cosmetic or non-essential treatments. If you’re considering one of these services that are not medically necessary, it likely won’t qualify as an FSA-approved expense. It’s always good to check with an HR administrator to confirm before scheduling a service that may not be eligible.
Here’s how you can maximize your healthcare savings through online FSA shopping.
FSA Shopping Is Easy
If you know which FSA-approved products you need, you can visit any business that sells them. However, you will probably find the experience to be easier and more convenient by shopping at an FSA online store. If you have never engaged in online FSA shopping, an excellent place to start is by visiting FSAStore.com.
It is the only online store that specializes in selling FSA-approved products and services and nothing else. They provide a complete, alphabetized listing of all FSA-eligible products and procedures and common medical procedures that don’t qualify. The site also lets you search by account and eligibility types and includes valuable descriptions of each product or service so that you know what you’re getting.
Other large retailers, such as Walmart, Target, Walgreens, CVS, and Amazon also offer special sections on their websites for FSA shoppers. These companies (along with many others) also provide listings of the FSA-eligible items they carry to make your FSA online shopping easier.
Tips for FSA Online Shopping
- Save FSA receipts. Participants should save their receipts regardless of where they make a purchase. If your benefits manager or the IRS has questions about any of your FSA purchases, the receipts will provide documentation to support the transaction.
- Utilize your FSA debit card. Many FSA plans now include a dedicated debit card to pay only for FSA-approved purchases. Paying with a personal credit or debit card means paying out of pocket. The account holder then submits a claim for approval. Once that is complete, you must wait to be reimbursed for the expense. In contrast, paying with an FSA card takes the money directly from your FSA. You don’t pay out-of-pocket, and you generally don’t have to submit a claim or wait for reimbursement. Remember that your benefits administrator may still ask for receipts to verify your expenses.
- Not all products or services are FSA-eligible. It always pays to check before paying for an item out of pocket. Here are 14 approved products/services you might think wouldn’t qualify.
- Remember the FSA spending deadline. Unlike HSAs, FSAs have a “use it or lose it” component, meaning unused funds go back to the employer at the end of the year, even though the employee contributed the money. Some employers will allow you to roll a portion over to the following year. But whatever is left after that returns to the employer. Try these last-minute creative ways to spend FSA funds before the deadline expires.
FSA shopping online is an easy and convenient way to maximize healthcare savings. All you need is a debit or credit card and an Internet connection, and you’re ready to start saving.
DataPath, Inc. creates innovative solutions for tax-advantaged, post-tax, and compliance benefits administration, including FSAs, HRAs, HSAs, LSAs, COBRA, and more. Please enter your email (above right) to be notified when new blog articles are published.