Medical Expenses Without HSA or FSA Reimbursement

There are a number of expenses we have for health or medical care that don't qualify to be reimbursed through our Flexible Spending Accounts or Health Savings Accounts although it seems like they should qualify.

In some ​cases, they are expenses that were reimbursable in the past, like over-the-counter drugs, but the laws and regulations have changed. In other cases, they've just never been tested through the income tax auditing process, like the expense of using of a patient advocate.

For clarification purposes, the IRS provides guidance for the types of expenses you may think should qualify for reimbursement through HSAs or FSAs but do not. Here is the IRS's master list of non-qualifying medical expenses.

Anything Your Insurance Has Already Paid For Is Not a Qualifying Expense

woman looking at over-the-counter meds at pharmacy
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It may seem obvious, but if you are estimating how much to set aside in a Flexible Spending Account, it's an important reminder. You'll need to know how much of any medical need is covered by your insurance, meaning, you won't be paying from your own pocket and therefore, won't need to be reimbursed.

For example, if your doctor recommends you quit smoking, writes you a prescription to help, and you pay only a co-pay to get your prescription, then account for the co-pay only in your planning, and not the total cost of the drug.

Over-the-Counter Medicines Are Not Qualified Medical Expenses

Prior to the 2011 tax year, over-the-counter medicines qualified as HSA or FSA expenses and could be reimbursed. However, that is no longer true unless you can get your doctor to write a prescription for the over-the-counter drug you take.

If your doctor recommends any over-the-counter drugs for you such as a daily aspirin or even vitamins, ask your doctor to write a prescription for that drug, and you'll be able to include it in your qualifying expenses.

Some Dental Treatments Are Not Qualified Medical Expenses

Dental treatments are considered qualifying expenses only if they prevent or fix dental problems.

Of course, not every service provided by a dentist prevents or fixes problems. For example, tooth whitening is not included because it is not considered to be a health or medical treatment. Therefore, it is not a qualifying medical expense, reimbursable by an HSA or FSA.

Some Health Insurance Premiums Are Not Qualified Medical Expenses

While many of the premiums you pay for health-related services can be considered qualifying expenses, not all of them can.

The IRS will not let you include any premium or portion of your premium paid by your employer, nor can you include any premiums for life insurance policies, any part of your car insurance (even for medical expenses) or others. Be clear about what is, or is not, legal to include.

Most Gym Memberships, Spas or Health Clubs Are Not Qualified Medical Expenses

Even if weight loss expenses may be qualified medical expenses if your doctor recommends them, your gym membership or services obtained at a spa or health club may not be - depending on the circumstances under which you use those services.

The IRS marks the distinction between losing weight for appearance sake vs losing weight for a medical condition under a doctor's care. Before you attempt to be reimbursed for these types of expenses, or before you account for them in your planning for set-asides in a Flexible Spending Account, double check with the administrator of your FSA or HSA program to determine whether they will be reimbursable.

Medicines or Drugs You Purchase from Outside the United States Do Not Qualify

If you are tempted to import your prescription drugs from another country, don't try to be reimbursed for the cost of that drug as a qualified medical expense through your FSA or HSA.

Private Patient Advocate Expenses Are Not Qualified Medical Expenses

While hiring a private patient advocate can be a smart move to improve your chances for a good medical outcome, the IRS does not yet list it among its allowable qualifying expenses for reimbursement under an FSA or HSA.

FSA and HSA Qualifying Expenses

Don't forget that although there are many medical and health expenses that are disallowed for reimbursement through FSAs and HSAs, there are dozens more that are qualified medical expenses.

When it comes time to determine how much money you should set aside in a Flexible Spending Account, or whether a certain expense qualifies for reimbursement, you can always ask a tax professional if you can't figure it out from these lists.

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