What Expenses Are Reimbursable in a Flexible Spending Account?

The purpose of a flexible spending account is to provide the enrollee with a tax-free way of saving and budgeting for medical expenses. This is done through payroll deductions by the enrollee's employer. The funds contributed are pre-tax dollars. The Internal Revenue Service provides guidelines as to how funds from health spending accounts are utilized.

What Is a Flexible Spending Account?

• A flexible spending account differs from a regular health savings account. The funds are not held in a bank but rather by a funds administrator contracted by your employer. Enrollment in an FSA is typically done during the employer's open enrollment period. The employee works with the plan administrator to determine how much he expects to spend in medical expenses that are not covered by insurance. Once a dollar amount has been established, the employee signs up for the program, and the overall amount is broken down over a year and deducted each pay period. The employee may receive a debit card with which to pay for medical expenses through the FSA plan, or he may have to pay upfront and submit forms for reimbursement.

Covered Medical Expenses

• Flexible spending account dollars can be used for co-pays and deductibles at the doctor's office and other medical providers. This is helpful if the individual does not have vision or dental coverage through their employer. Medical devices, such as hearing aids, canes, crutches or wheelchairs, are covered. Acupuncture and chiropractor services are covered items as well. The Internal Revenue Service offers a complete list of covered services under Publication IRC Section 213 (d).

Non-covered Expenses

• Cosmetic procedures and holistic services are not covered unless there is a medically necessary reason for utilizing the services. Expenses that contribute to overall general health, such as a vacation or spa treatments, are also not covered. Health club and pharmacy club expenses are non-covered items as well. Household help, even if doctor-ordered, cannot be reimbursed under a flexible spending plan.

Medications

• Doctor-prescribed medications are reimbursable through a flexible spending account. Over-the-counter medications are no longer reimbursable without a prescription under the 2009 Health Care Bill. This means that cough syrup, pain relievers and medicated gels/lotions require a doctor's prescription in order to be submitted for reimbursement. In light of this new law, many individuals may decide to reduce the amount that they contribute to a flexible spending account since monies in these accounts must be used by year's end.