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How Health Care FSAs work

How Health Care FSAs work

You can use your Health Care FSA to pay for qualified medical expenses that are not covered or reimbursed by your employer's medical, dental or vision plans, or by any other type of insurance. As you incur medical expenses not fully covered by your insurance, you submit a copy of the Explanation of Benefits or the provider's invoice and proof of payment to the plan administrator, which will then issue you a reimbursement check or make a direct deposit to your bank account.

The minimum and maximum amounts you can contribute to the Health Care FSA are set by your employer, although the maximum allowed by the IRS is $2,500 a year. If you are married and your spouse also has a health care FSA through his or her job, you can each contribute up to the maximum allowed by your respective plans potentially up to $5,000. This differs from the rules for Dependent Care FSAs, which are outlined in the Dependent Care FSA section below.

FSA contributions are deducted from your pay on a monthly basis, so by year's end, your total annual contribution amount will have been deducted from your pay. With the Health Care FSA (unlike the Dependent Care FSA), you can submit a claim for reimbursement earlier in the plan year that exceeds your current account balance; however, the total amount of claims submitted for the year is limited to the total contribution amount you chose during open enrollment.

Eligible And Ineligible Health Care Expenses
You can use a Health Care FSA to pay for any IRS-allowed medical expenses not covered by your medical, dental or vision coverage. Common allowable expenses include:

  • Deductibles and co-payments for office visits and prescription drugs. (Note: Other bullet lists have periods.)
  • Orthodontia, braces or other dental work over plan limits
  • Contact lenses, glasses or lasik surgery
  • False teeth, hearing aids, crutches, wheelchairs, and guide dogs for the blind or deaf
  • Fees in excess of reasonable and customary amounts allowed by your insurance
  • Cost of vasectomies, hysterectomies and birth control
  • Non-elective cosmetic surgery
  • Over-the-counter medicines, provided you have a doctor's prescription (including pain relievers, antacids, cough syrup, bandages, blood pressure monitors, first aid kits, flu shots and other vaccines, allergy medications, cold and flu medications, etc.) Insulin does not require a prescription See this IRS Bulletin for details.
  • Physical therapy
  • Acupuncture, chiropractic and homeopathic care, when administered by a licensed practitioner
  • Smoking cessation programs
  • Inpatient treatment at a center for alcohol or drug addiction
  • Qualified long-term care services

The following products and services are NOT eligible for reimbursement through a Health Care FSA:

  • Babysitting, childcare or nursing services for a normal, healthy baby
  • Controlled substances, without a prescription
  • Elective cosmetic surgery, such as a face lift, hair transplants, teeth whitening or liposuction
  • Electrolysis or hair removal
  • Health club dues
  • Nutritional supplements, unless prescribed by a medical practitioner for a specific medical condition
  • Cosmetics
  • Dental products (toothpaste, tooth brush, dental floss, teeth whiteners)

Check IRS Publication 502, Medical and Dental Expenses, for a complete list of allowable expenses ( Your employer may also have a list of allowable and unallowable expenses available.

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