FAQ Library

Health FSA FAQs

What is a health flexible spending account?

A health flexible spending account (FSA) lets you use pre-tax dollars to pay for eligible health care expenses for you, your spouse, and your eligible dependents. Money is set aside from your paycheck before taxes are taken out. You can then use your pre-tax FSA dollars to pay for eligible health care expenses throughout the plan year. You save money on expenses you’re already paying for, like doctors’ office visits, prescription drugs, and much more.

Why is it a good idea to have a health FSA?

Health FSAs benefit everyone – single individuals, families, and soon-to-be retirees. Setting aside pre-tax dollars means you pay fewer taxes and increase your take-home pay by your tax savings. You save money on eligible expenses that you are paying for out of your pocket. The amount you save depends on your tax bracket.

For example, if you are in the 30 percent tax bracket, you can save $30 on every $100 spent on eligible health care expenses such as dental checkups, prescription eyeglasses, and bandages. Discover how your savings can add up by visiting our FSA Savings Examples page.

What expenses are covered under a health FSA?

Only eligible expenses can be reimbursed under the FSA. These expenses are defined by IRS rules and your employer’s plan. You can learn about your employer’s plan by reading the Summary Plan Description (SPD).

Eligible health FSA expenses are those that you pay for out of your pocket for medical care that’s provided to you, your spouse, and eligible dependents. Generally, IRS rules state that medical care includes items and services that are meant to diagnose, cure, mitigate, treat, or prevent illness or disease. Transportation that is primarily for medical care is also included. Here are some examples:

Your health plan deductible (the amount you pay before your plan starts paying a share of your costs)
Your share of the cost for doctor’s office visits and prescription drugs
Your share of the cost for eligible dental care, including exams, X-rays, and cleanings
Your share of the cost for eligible vision care, including exams, eyeglasses, contact lenses, and laser eye surgery

Check out our Eligible Expenses page for more details.

The list of eligible expenses is based on IRS rules. Here are some other IRS rules you should know about:

No double-dipping – Expenses reimbursed under your health FSA cannot be reimbursed under any other plan or program. Only your out-of-pocket health care expenses are eligible for reimbursement. Plus, expenses reimbursed under a health FSA may not be deducted when you file your tax return.
Timing is everything – FSAs have a start date and an end date, and the time in between is called the plan year. Expenses must be incurred during the FSA plan year. As noted in IRS guidelines, "Expenses are incurred when the employee (or the employee’s spouse or dependents) is provided with the medical care that gives rise to the medical expenses, and not when the employee is formally billed, charged for, or pays for the medical care.” This means the date of service must be within the current plan year and not when you pay for the service.

Are over-the-counter medicines eligible expenses?

Yes, but they require a prescription to be an eligible FSA expense. OTC medicines and drugs are no longer eligible for reimbursement under your health FSA unless prescribed by a doctor (or another person who can issue a prescription) in the state where you purchase the OTC medicines.

Any claim you submit for reimbursement that has an OTC medicine expense must include a Request for Reimbursement Form and one of the following types of supporting documentation:

A written or electronic OTC prescription along with an itemized cash register receipt that includes the merchant name, name of the OTC medicine or drug, purchase date, and amount
A printed pharmacy statement or receipt from a pharmacy that includes the patient’s name, the Rx number, the date the prescription was filled, and the amount

Allergy medication, aspirin and pain relievers, as well as first aid creams and ointments are examples of OTC medicines that require a prescription. Learn more on our Over-the-counter Expenses page.

Please Note: Prescription medicines and insulin (including over-the-counter insulin) aren’t affected by this change. You can follow the same process when buying these items and submitting FSA claims.

What over-the-counter items are still eligible expenses?

Items such as bandages and thermometers are eligible for reimbursement through your health FSA, and if you have a benefit card, you can use it to purchase these items. A detailed list of examples is on our Over-the-counter Expenses page.

Can I use my FSA funds to stock up on over-the-counter items?

No. You can only use your FSA for items that you can reasonably use during the plan year. If you “stockpile” OTC items, you won’t be reimbursed.

What expenses are not covered under a health FSA?

Expenses that are not approved are called “ineligible expenses.” Ineligible health FSA expenses include:

Cosmetic surgery and procedures, including teeth whitening
Herbs, vitamins, and supplements used for general health
OTC medicines that you don’t have a prescription for (except insulin)
Insurance premiums
Family or marriage counseling
Personal use items such as toothpaste, shaving cream, and makeup
Prescription drugs imported from another country

Also, as described in a previous question, you can’t use your FSA for:

Services that take place before or after your coverage period
Expenses that are reimbursed by another plan or program, including a health care plan

These are only a few of the examples of expenses that aren’t covered by a health FSA. Find a full list of eligible and ineligible expenses on our Eligible Expenses page.

How do I use my FSA for orthodontic services?

These services aren’t provided the same way as other types of health care. Most of the time, orthodontic services are provided over a long period of time and may extend beyond the plan year, and services tend to be hard to match up with actual costs. As a result, the reimbursement process is different, and you have two ways to be reimbursed. Learn more on our Orthodontia page.

How much money can I put in my health FSA?

The amount you can put in your FSA is called an “annual election.” Your employer decides the maximum election amount for your FSA plan each plan year. You can find out how much you can put into your health FSA by reading your enrollment materials or Summary Plan Description (SPD).

How much money is available during the plan year?

Your entire health FSA election is available on the first day of the plan year. If your FSA is active, your full annual election amount decreases as you submit your reimbursement requests. You can find out your available funds by logging in to your online account.

What is the "use-it-or-lose-it" rule?

The IRS created the "use-it-or-lose-it" rule. It requires that all money you put into your FSA must be used to reimburse qualified expenses incurred during that plan year. Funds that are left over after the plan year ends are forfeited. The unused portion of your health FSA cannot be paid to you in cash or other benefits, and you can’t transfer money between FSAs. To reduce the risk of losing money at the end of your plan year, carefully estimate your expenses when choosing your annual election amount.

How often are reimbursements made?

Your employer chooses the reimbursement schedule. You can find out how often reimbursements are made by reading the Summary Plan Description.

Where can I get a reimbursement request form?

Just log in to your online account to find it.

What do I need to submit along with a reimbursement form?

You must save all itemized receipts and other supporting documentation for every FSA expense. Try to keep all of your documentation filed in an envelope or box. Appropriate documentation includes:

For office visits – Your health plan's Explanation of Benefits (EOB) statement or an itemized receipt or bill from the provider that includes the patient's name, a description of the service, the original date of service, and your portion of the charge.
For prescription drugs – A pharmacy statement or printout including the patient's name, the Rx number, the name of the drug, the date the prescription was filled, and the amount.
For over-the-counter medicines – A written or electronic OTC prescription along with an itemized cash register receipt that includes the merchant name, name of the OTC medicine or drug, purchase date, and amount; OR a printed pharmacy statement or receipt that includes the patient’s name, the Rx number, the date the prescription was filled, and the amount.
For over-the-counter health care-related products – An itemized cash register receipt with the merchant name, name of the item/product, date, and amount.

In some cases, a Medical Determination Form completed by a doctor is required. Credit card receipts, canceled checks, and balance forward statements do not meet the requirements for acceptable documentation.

How do I keep track of my account activity?

Your FSA information is available any time day or night by logging in to your online account.

What is the deadline to use this plan year’s FSA funds?

It depends on the rules for your employer’s FSA. With some FSAs, you can spend the money until the last day of the plan year. After that date, you forfeit any money left in the account. But some employers give more time to use the FSA funds after the plan year ends.

Run-out period – This is a set number of days after the plan year ends that allows you to submit claims for eligible expenses incurred during the plan year.
Grace period – This is also a set number of days after the plan year ends, and in most plans, it lasts two months and 15 days. During this time, you can use remaining FSA funds to reimburse eligible expenses incurred during the grace period.

Even if you have a run-out period or grace period, it’s important to plan carefully when you decide how much to put in your FSA. Don’t think of the grace period as an extension of the plan year. It’s more like a cushion in case your expenses fall a little short of what you expected. Find more information on our Run-out and Grace Period page.

Not all plans include a run-out period or grace period, and the length of time can vary. For more details about the deadlines for your employer’s FSA and when you can file claims, check your Summary Plan Description.

Can I change my election amount?

Your election can’t be changed during the plan year unless you have a change in status or other qualified event – that’s an event defined by IRS rules – and your employer's plan must allow the change as well. Learn more on our Health FSA Participant Guidelines page.

What happens if I stop working for working for this employer?

If you stop working for your employer or you lose your FSA eligibility, your plan participation and your pre-tax contributions will end automatically. Expenses for services you have after your termination date are not eligible for reimbursement.

Please Note: You may be entitled to elect COBRA continuation coverage under the health FSA and receive reimbursement for qualified expenses incurred after your termination, but only if you continue to make the required FSA COBRA premium payment using your money after taxes have been taken out. However, you generally do not have the right to elect COBRA continuation coverage if the cost of COBRA continuation coverage for the remainder of the plan year equals or is more than the amount left in your FSA. Please see your Summary Plan Description for specific rules that apply to your FSA plan.

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