Qualified medical expenses for FSAs

The Internal Revenue Service determines what expenses can be reimbursed with funds from a health care flexible spending account (FSA).

Examples of qualified expenses

  • Acupuncture
  • Alcohol and drug addiction treatment
  • Breast reconstruction surgery
  • Dental treatment
  • Diagnostic tests and devices
  • Doctor’s visits
  • Prescriptions
  • Eyeglasses, contact lenses and exams
  • Fertility enhancements
  • Hearing aids and batteries
  • Operations/surgery (non-cosmetic)
  • Nursing services
  • Physical therapy
  • Psychiatric care
  • Smoking cessation

View IRS Publication 502 for a full list of qualified medical expenses.

Examples of nonqualified expenses

  • Cosmetic surgery
  • Diaper service
  • Electrolysis or hair removal
  • Funeral expenses
  • Health club dues
  • Illegal operations and treatments
  • Maternity clothes
  • Nutritional supplements
  • Over-the-counter medicines for which you do not have a doctor's prescription
  • Toiletries (e.g. toothbrush, toothpaste)
  • Teeth whitening
  • Weight loss programs (unless prescribed to treat a specific disease)

Tax savings

Consider this example of how a family can save money with a health care FSA.*

Matt, 37, and Jennifer, 36, are married with an 11-year-old daughter. Together, their gross annual income is $75,000, and they file their taxes jointly.

Their estimated health care expenses for the year are:

Deductibles $ 600
Eye exams $ 125
Eyeglasses/contacts $ 315
Prescriptions $ 480
Dental expenses $ 200
Orthodontia $1,500
Total $3,220

 

Matt and Jennifer would save approximately $730 a year if they contributed to an FSA to pay for qualified medical expenses.

  With an FSA Without an FSA
Income $75,000 $75,000
Health care expenses ($3,220) N/A
Taxable income $52,180 $55,400
Estimated taxes ($7,097) ($7,580)
Estimated Social Security ($4,450) ($4,650)
Estimated Medicare ($1,041) ($1,088)
Health care expenses N/A ($3,220)
Net pay $59,192 $58,462


*This hypothetical example is presented strictly for educational purposes and doesn’t include other potential factors, such as pretax contributions to a qualified retirement plan, mortgage or other deductions. Please consult a tax, legal or financial advisor about your own personal situation.


LOOKING FOR QUALIFIED MEDICAL EXPENSES FOR YOUR HSA?

Qualified medical expenses are defined by the IRS, and there are some differences between HSAs and FSAs.
 View what expenses are covered by an HSA


HSA, FSA, HRA: WHAT'S THE DIFFERENCE?

Learn how an FSA compares to a HRA and HSA, and decide which option is best for you and your family.
 Compare health accounts


EMPLOYERS: OFFER AN FSA

Contact an Optum sales representative to learn more about offering FSAs to your employees.

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