The product or service must meet the definition of medical care as found in Internal Revenue Code (IRC) Section 213(d): Participants can use Medical FSA funds to pay for expenses that primarily prevent, treat, diagnose, or alleviate a physical or mental defect or illness – not expenses for cosmetic reasons or one’s that are merely beneficial to one’s general health. Additionally, expenses must be for an eligible medical service provided to the participant, their spouse, or their eligible dependents.

Examples of eligible expenses include:

• Copayments, coinsurance, and deductibles
• Doctors, hospitals, medical labs
• Dental care (e.g., exams, fillings, crowns, orthodontia)
• Vision care (e.g., exams, eyeglasses, contact lenses)
• Chiropractic care, acupuncture
• Prescription drugs
• Over-the-counter drugs, medicines, and medical supplies

Employers can restrict what’s eligible depending on their plan design. Visit the Eligible Expenses Page for more information on what’s eligible, including an Eligible Expense Lookup Tool.

A Limited FSA can only be used to pay for qualified vision and dental expenses, including orthodontia services and some over-the-counter drugs and medicines. You cannot use a Limited FSA for health payments such as copayments, coinsurance, or deductible. Example eligible expenses include:

• Dental: cleanings, filings, artificial teeth, orthodontia, crowns, fluoridation services, sealants
• Vision: exams, prescription glasses, Lasik/laser eye surgery and other vision correction procedures, reading glasses

A dual-purpose item is one where the primary purpose of the service isn’t medical but due to a person’s medical condition, it provides medical benefits. Examples include:

• Massage therapy
• Calcium and fiber supplements
• Herbal medicines and homeopathic remedies
• Vaporizers/humidifiers
• Vitamins/minerals/supplements

A Letter of Medical Necessity (LMN) is used when a person wants to use funds from their pre-tax account but the item or service is not universally recognized as an eligible expense by the IRS. When an LMN is completed by your health care provider certifying that the service/product is medically necessary and submitted with a claim, this will allow for reimbursement of the service/products. Note that because of the nature of dual-purpose items, participants cannot use their Benefits card to pay for the item.

Expenses must enable you or your spouse to be gainfully employed, look for work, or attend school full-time. Common eligible expenses include:

• Daycare (including employer-provided daycare)
• Before and after school care
• Preschool/Nursery school
• Au pairs and nannies
• Babysitters (in your home or someone else’s; must be work-related)
• Sick-child facility (primary purpose must be child care, not medical)
• Night care (if work-related/night shift. IRS restrictions may apply)
• Transportation to and from eligible care (provided by a care provider)
• Fees for applications, deposits, and registration (Must be related to obtaining care and cannot be reimbursed until care is provided)
• Adult daycare and elder care

Other requirements to use funds include the following:

• The care must be for a dependent under age 13 or an adult dependent who is physically or mentally incapable of self-care.
• Services must be for physical care (not education, meals, and diapers) and cannot be used for overnight care services.
• The child’s parent or other dependents cannot provide the service.
• The date a service is provided (not the payment date) determines the plan year in which an expense is eligible.
• You cannot claim a federal tax credit for any expenses reimbursed through your Dependent Care FSA.

Employees can spend their pre-tax dollars as they are deposited into their account in one of two ways:

• Through their Benefit Card: For Medical FSAs and carded Dependent Care plans, participants can swipe at the point of sale if the location’s Merchant Classification Codes are correctly set up. Participants should always save their receipts in case they receive a substantiation request or are audited by the IRS.
• By submitting a claim for reimbursement: Participants can pay for the eligible expense with other funds, then submit their receipt along with their claim to their Third-Party Administrator (TPA). The TPA will review the claim, and – if approved – issue funds to the participant via a mailed check or direct deposit and adjust their FSA account balance accordingly. For most plan setups, this will be the only way to spend Dependent Care funds.

No. Because eligible expenses are paid with tax-free dollars from your Medical FSA, you cannot claim the same expenses on your income tax return (no double-dipping).