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Eligible Health Care Expenses
You may include expenses for yourself, your spouse, your children and other dependents. Qualified expenses are those expenses incurred during the plan year for the diagnosis, treatment or prevention of disease, and for treatments affecting any part or function of the body. The expense must be to alleviate or prevent a physical defect or illness. Expenses solely for cosmetic reasons generally are not eligible. Expenses that are merely beneficial to one's health are not eligible. Benefits Available Through Health FSAs
A health FSA can be used to reimburse medical and dental expenses that qualify as federal income tax deductions (whether or not they exceed the IRS minimum applied to these deductions) under Section 213 of the tax code. Medical expenses that are not deductible under Section 213 may not be reimbursed by a health FSA. Expenses may be incurred by the employee or by the employee's spouse or eligible dependents (children, siblings, parents and others for whom an exemption may be claimed under Section 152 of the tax code). "Medical care" expenses as defined by Section 213 include amounts paid for the diagnosis, treatment, or prevention of disease, and for treatments affecting any part or function of the body. The expenses must be to alleviate or prevent a physical defect or illness. Expenses for solely cosmetic reasons generally are not expenses for medical care. Examples include facelifts, hair transplants, and hair removal (electrolysis). Also, expenses that are merely beneficial to one's general health (for example, vacations) are not expenses for medical care. One fact or circumstance that often—but not always—indicates that medical care involves the treatment or prevention of disease is whether the care is prescribed by a physician as medically necessary. A mere recommendation by a physician probably is not enough. In addition, there should be a doctor-patient relationship between the employee and the physician prescribing the care. Following is an alphabetical list of items that are encountered frequently by sponsors of FSAs. Some of these items may be reimbursed, and some may not; each item is followed by a brief note indicating which category the item falls into. • Abortion. Medical expenses associated with a legal abortion are
• Acupuncture. Medical expenses paid for acupuncture are
• Alcoholism and drug abuse. Medical expenses paid to a
treatment center for alcohol or drug abuse are reimbursable. This includes meals and lodging provided by the center during treatment. • Allergy treatment products and household improvements
to treat allergies: filters, pillows, comforters, blankets,
special vacuums, etc. Generally no, if the product is one which
would be owned even without allergies, such as a pillow or a
vacuum. However, an air purifier or water filter necessary to
treat a specific medical condition may be allowable, with proper
medical need documentation from a doctor.
• Alternative remedies. A gray area. Expenses of professional
(i.e., naturopath) may be eligible (so long as legal). However, expenses of remedies not reimbursable. • Ambulance. Medical expenses paid for ambulance service are
• Artificial limb. Medical expenses paid for an artificial limb are
• Artificial teeth. Yes, see Medical aids.
• Aspirin. Yes
• Attendant. See Nursing services.
• Autoette. See Wheelchair.
• Automobile. See Car.
• Baby-sitting and childcare. No.
• Birth control pills and devices. Medical expenses paid for
birth control pills and devices prescribed by a doctor are reimbursable. • Birthing classes. See Lamaze.
• Braille books and magazines. The amount by which the cost
of braille books and magazines for use by a visually impaired person exceeds the price for regular books and magazines is reimbursable. • Breast augmentation. Expenses related to breast
augmentation (such as implants or injections) are not reimbursable because the procedure is cosmetic in nature. However, medical costs related to the removal of breast implants that are defective or are causing a medical problem are reimbursable. • Breast pumps. Generally no. But, expenses paid for a breast
pump may be eligible if there is an underlying medical reason (i.e., abscess). • Breast reduction. Medical expenses related to breast reduction
surgery are reimbursable only if a physician substantiates that the procedure is medically necessary and not for cosmetic purposes (that is, to prevent or treat an illness or disease). • Capital expenses. If their main purpose is medical care, capital
expenses paid for special equipment installed in a participant's home or for improvements to the home are reimbursable. For further details, see discussion under the heading, Capital expenses, below. • Car. Medical expenses are reimbursable for special hand controls
and other special equipment installed in a car for the use of a person with disabilities. Also, the amount by which the cost of a car specially designed to hold a wheelchair exceeds the cost of a regular car is a reimbursable medical expense. However, the cost of operating a specially equipped car is not reimbursable (see Transportation). • Childcare. See Dependent Care.
• Childbirth classes. See Lamaze.
• Chiropractor. Expenses paid to a chiropractor for medical care
• Christian Science practitioners. Medical expenses paid to
Christian Science practitioners are reimbursable. • Church of Scientology. See Scientology.
• Clinic. Medical expenses for treatment at a health clinic are
• Coinsurance amounts. Medical coinsurance amounts and
• Contact lenses. See Vision care.
• Cosmetic surgery. Medical expenses for cosmetic surgery are
reimbursable if the surgery is necessary to improve a deformity arising from, or directly related to, a congenital abnormality, a personal injury resulting from an accident or trauma, or a disfiguring disease. However, medical expenses paid for other cosmetic surgery are not deductible medical expenses under Code Section 213, and thus are not reimbursable by a health FSA. This applies to any procedure that is directed at improving the patient's appearance and does not meaningfully promote the proper function of the body or prevent or treat illness or disease. For example, face lifts, hair transplants, hair removal (electrolysis) and liposuction generally are not deductible. If there is a concern that a medical or dental surgery could be considered cosmetic, a doctor's certification should be obtained explaining how the procedure meaningfully promotes the proper function of the body or prevents or treats an illness or disease. This will help to prove that the claim is reimbursable. • Crutches. Medical expenses paid to buy or rent crutches are
• Dancing lessons, swimming lessons, etc. Dancing lessons,
swimming lessons, etc., are not reimbursable even if they are recommended by a doctor. • Day care. See Dependent care.
• Deductibles. Medical insurance deductibles and coinsurance
amounts under the employer's plan are reimbursable. • Dental treatment. Medical expenses for dental treatment are
reimbursable. This includes fees paid to dentists for X-rays, fillings, braces, extractions, dentures, etc. Also see Cosmetic surgery. • Dependent care expenses. Dependent care expenses are not
reimbursable under a health FSA, but may be reimbursable under a dependent care FSA. • Diaper service. Payments for diapers or diaper services are
• Diets. See Special foods.
• Disability. See Braille books and magazines, Car, Guide dog,
Learning disability, Lifetime care, Mentally disabled, Personal use items, Schools, Television, Therapy, Transportation, Wheelchair. Also see discussion under the heading "Capital expenses," below. • Drugs. See Medicines.
• Drug addiction. See Alcoholism.
• Ear piercing. Expenses for ear piercing are not reimbursable.
• Electrolysis or hair removal. See Cosmetic surgery.
• Employment-related expenses. Employment-related
expenses such as employment physicals are not reimbursable. (Note, however, that physical exams that are not employment-related are reimbursable. See Physical exams.) • Employment taxes. See Nursing services.
• Exercise equipment. Generally no.
• Eyeglasses. See Vision care.
• Face lifts. No. See Cosmetic surgery.
• Fertility. Medical expenses related to the treatment of infertility,
including in vitro fertilization, are reimbursable. • Fitness programs. No. Programs for general health are not
• Flu shots. Yes. Even in the absence of a specific diagnosis.
Immunizations to prevent disease should qualify. • Food. See Special foods.
• Founder's fee. See Lifetime care.
• Funeral expenses. Expenses for funerals are not reimbursable.
• Genetic testing. To the extent it is done to determine possible
defects (e.g., if mother is over age 40), it is probably deductible. • Group medical insurance. See Insurance premiums.
• Guide dog or other animal. The cost of a guide dog or other
animal used by the visually impaired or hearing impaired is reimbursable. Costs associated with a dog or other animal trained to assist persons with other physical disabilities are also reimbursable, as are amounts paid for the care of these specially trained animals. • Hair transplant. See Cosmetic surgery.
• Health club dues. Health club dues, YMCA dues, or amounts
paid for steam baths for general health or to relieve physical or mental discomfort are not reimbursable. • Healthy baby care. See Nursing services.
• Hearing aids. Medical expenses for a hearing aid and batteries
• Hospital. Expenses incurred as a hospital in-patient or out-
patient for laboratory, surgical and diagnostic services qualify as medical expenses. • Household help. The cost of household help, even if
recommended by a doctor, is prohibited. However, certain expenses paid to an attendant providing nursing-type services are reimbursable (see Nursing services). • Human guide. Expenses for a human guide—to take a blind
child to school, for example—are reimbursable. Also see Guide dog. • Impotence or sexual inadequacy. Medical expenses related
to the treatment of impotence are reimbursable if substantiated by a physician. • In vitro fertilization. See Fertility.
• Infertility. See Fertility.
• Insulin. The cost of insulin is reimbursable.
• Insurance premiums. Not allowed in a medical reimbursement
• Laboratory fees. Laboratory fees that are part of medical care
• Lamaze (or birthing) classes. Unclear. A private letter ruling
indicated that such expenses may be eligible under Sec 213 to the extent instruction relates to birth and not child rearing. More recently, IRS officials have informally indicated that such expenses may be personal in nature. Amounts attributable to the "coach" or "significant other" are not eligible. • Laser eye surgery. Yes. See Radial Keratotomy. But not laser
surgery around the eyes for wrinkles (see Cosmetic). • Lead-based paint removal. The cost of removing lead-based
paints from surfaces in a home to prevent a child who has (or has had) lead poisoning from eating the paint are reimbursable. These surfaces must be in poor repair (peeling or cracking) or within the child's reach. The cost of repainting the scraped area, however, is not reimbursable. • Learning disability. Tuition payments to a special school for a
child who has severe learning disabilities caused by mental or physical impairments, including nervous system disorders are reimbursable. A doctor must recommend that the child attend the school. See Schools. Also, tutoring fees paid on a doctor's recommendation for a child's tutoring by a teacher who is specially trained and qualified to work with children who have severe learning disabilities are reimbursable. However, the cost of ordinary instruction which a child would require in any event is not a medical expense and is not deductible. • Legal fees. Legal fees paid to authorize treatment for mental
illness are reimbursable. However, any part of a legal fee that is a management fee—for example, a guardianship or estate management fee—is not reimbursable. • Licensing requirements. Neither the tax code nor IRS
regulations require a plan participant to determine whether a provider is qualified, authorized under state law or licensed to practice before using his/her services. In Revenue Ruling 63-91, the IRS ruled that: "Amounts paid for medical services rendered by practitioners, such as chiropractors, psychotherapists, and others rendering similar type services, constitute expenses for 'medical care' within the provisions of section 213 of the Code, even though the practitioners who perform the services are not required by law to be, or are not (even though required by law) licensed, certified, or otherwise qualified to perform such services." The main issue is the nature of the treatment, not the license held by the practitioner. Thus, services provided by a range of organizations and individuals may be reimbursable, including care provided by hospitals, medical doctors, dentists, eye doctors, chiropractors, nurses, osteopaths, podiatrists, psychiatrists, psychologists, physical therapists, acupuncturists, psychoanalysts and others. • Life insurance premiums. Life insurance premiums are not
reimbursable in a medical reimbursement account. • Lifetime care. Part of a life-care fee or "founder's fee" paid
either monthly or as a lump sum under an agreement with a retirement home is reimbursable if it is allocable to medical care. The agreement must require a specified fee payment as a condition for the home's promise to provide lifetime care that includes medical care. Also, advance payments to a private institution for the lifetime care, treatment and training of an employee's physically or mentally impaired dependent upon the employee's death or inability to provide care are reimbursable. The payments must be a condition for the institution's future acceptance of the dependent and must not be refundable. • Liposuction. See Cosmetic surgery.
• Lodging and meals. The cost of lodging and meals at a hospital
or similar institution are reimbursable if the employee's main reason for being there is to receive medical care. (Also see Nursing home.) The cost of lodging not provided in a hospital or similar institution while an employee is away from home is reimbursable if four requirements are met: (1) the lodging is primarily for and essential to medical care; (2) medical care is provided by a doctor in a licensed hospital or in a medical care facility related to, or the equivalent of, a licensed hospital; (3) the lodging is not lavish or extravagant under the circumstances; and (4) there is not significant element of personal pleasure, recreation or vacation in the travel away from home. The reimbursable amount cannot exceed $50 for each night for each person. Lodging is included for a person for whom transportation expenses are a medical expense because that person is traveling with the person receiving the medical care. For example, if a parent is traveling with a sick child, up to $100 per night is reimbursable as a medical expense for lodging. Meals and lodging away from home for medical treatment that is not received at a medical facility, or for the relief of a specific condition, are not reimbursable even if the trip is made on the advice of a doctor. • Long-term care insurance premiums. Long-term care
insurance premiums are not reimbursable under a medical FSA. • Marijuana or other controlled substances. No. Amount paid
for controlled substances in violation of federal law, is not a deductible expense for medical care under Section 213, even if a state law requires a prescription of a physician to obtain and use the controlled substance and the taxpayer obtains a subscription. • Marriage counseling. Expenses for marriage counseling
services do not qualify as medical expenses. However, sexual inadequacy or incompatibility treatment is reimbursable if the treatment is provided by a psychiatrist. • Maternity clothes. Expenses for maternity clothes are not
• Massage therapy. Generally no, unless to treat an injury or
trauma. Not, e.g., for massage to relieve stress or depression. Treatment must be for a limited (prescribed) time. • Mattresses. Generally, no, unless the mattress is used almost
exclusively to treat a medical condition. Then, the IRS will consider (1)severity of the medical condition; (2)uniqueness of the mattress to treatment of the condition (for example, whether it is a special mattress or hospital bed or just a more expensive "extra-firm" mattress); and (3)lack of function as regular furniture. • Meals. See Lodging and meals.
• Medical aids. Medical aids such as false teeth, hearing aids,
orthopedic shoes, crutches and elastic hosiery are reimbursable. • Medical alert devices. Personal emergency transmitters worn
as a bracelet or necklace are not reimbursable. • Medical monitoring and testing devices (e.g., blood pressure
monitor, syringes, glucose kit, etc.). Yes, to the extent prescribed by a physician for a particular medical ailment. • Medical records charges - i.e., fee associated with transferring
medical records to a new practitioner. Yes. • Medical savings accounts (MSAs). MSAs cannot be offered as
• Medical services. Only legal medical services are reimbursable.
Amounts paid for illegal operations or treatments, regardless of whether they are rendered by licensed or unlicensed practitioners, are not reimbursable. • Medicare Part A. The tax paid for Medicare Part A is not
• Medicare Part B. Premiums paid for Medicare Part B are not
• Medicines. Amounts paid for prescribed medicines and drugs
are reimbursable. A prescribed drug is one which requires a prescription by a doctor for its use by an individual. The cost of insulin is also reimbursable. • Mentally disabled, special home for. The cost of keeping a
mentally disabled person in a special home (not the home of a relative) on the recommendation of a psychiatrist to help the person adjust from life in a mental hospital to community living is reimbursable. • Naturopathic expenses. Expenses not deductible where
treatment is illegal under applicable law. Expense of professional may be deductible, but expenses for "remedies" not deductible. Naturopathy. The issue of whether naturopathic expenses
are reimbursable is problematic. (Naturopathy is the
practice of treating a medical condition with "natural"
methods, such as processed plant matter, for example.)
There is no directly applicable official guidance on whether
such expenses should be reimbursed under a health FSA,
and scant (and contradictory) guidance that is applicable.
The following question is at the heart of this issue:
Are naturopathic treatments "medicine"? The answer to this question is: No. Section 213(b) limits the definition of "medicine or drugs" to those prescribed by a physician, and cross-references the definition of "physician" found in the Social Security Act (SSA). Naturopathic treatments prescribed by a naturopath are not reimbursable. • Norplant insertion or removal.Yes.
• Nursing home. The cost of medical care in a nursing home or
home for the aged for an employee, or for an employee's spouse or dependent, is reimbursable. This includes the cost of meals and lodging in the home if the main reason for being there is to get medical care. However, see Qualified long-term care services. • Nursing services. Wages and other amounts paid for nursing
services are reimbursable. Services need not be performed by a nurse as long as the services are of a kind generally performed by a nurse. This includes services connected with caring for the patient's condition, such as giving medication or changing dressings, as well as bathing and grooming the patient. Only the amount spent for nursing services is reimbursable. If the attendant also provides personal and household services, these amounts must be divided between the time spent performing household and personal services and the time spent on nursing services. Meals. Amounts paid for an attendant's meals are also reimbursable. This cost may be calculated by dividing a household's total food expenses by the number of household members to find the cost of the attendant's food, then apportioning that cost in the same manner used for apportioning an attendant's wages between nursing services and all other services (see above). Upkeep. Additional amounts paid for household upkeep because of an attendant are also reimbursable. This includes extra rent or utilities paid because of having to move to a larger apartment to provide space for an attendant Infant care. Nursing or babysitting services for a normal, healthy infant are not reimbursable. Social Security, unemployment (FUTA) and Medicare taxes paid for a nurse, attendant or other person who provides medical care are reimbursable. • Optometrist. See Vision care.
• Orthodontia. Expenses for orthodontic care are generally
reimbursable (for more information click here ), except care for cosmetic purposes. See Cosmetic surgery. • Orthopedic shoes. See Medical aids.
• Organ donor. See Transplants.
• Osteopath. Yes.
• Over-the-counter drugs Yes.
• Oxygen. Amounts paid for oxygen or oxygen equipment to
relieve breathing problems caused by a medical condition are reimbursable. • Parking. See Transportation.
• Patterning exercises. See Therapy.
• Personal use items. Items that are ordinarily used for
personal, living, and family purposes are not reimbursable unless they are used primarily to prevent or alleviate a physical or mental defect or illness. For example, the cost of a wig purchased at the advice of a physician for the mental health of a patient who has lost all of his or her hair from disease is reimbursable. If an item purchased in a special form primarily to alleviate a physical defect is one that in normal form is ordinarily used for personal, living and family purposes, the cost of the special form in excess of the cost of the normal form is reimbursable. (Also see Braille books and magazines.) • Phone equipment. See Telephone.
• Physical exams. Physical exams are generally reimbursable,
except for employment-related physicals. See Employment-related expenses. • Physical therapy. Generally yes, as long as required for a
• Pre-existing conditions. Medical expenses not covered
because of the plan's pre-existing condition limitation are reimbursable. • Pregnancy test--over-the-counter. No.
• Prescription drugs. See Medicines.
• Prescription sun glasses. Yes. Amount paid for eyeglasses and
lenses needed for medical reasons, and eye examinations. • Private hospital room. Yes. The amount up to what a non-
private room would cost. The extra amount paid for private room is not. • Prosthesis. See Artificial limb.
• Psychiatric care. Expenses for psychiatric care are
reimbursable. These expenses include the cost of supporting a mentally ill dependent at a specially equipped medical center where the dependent receives medical care. Also see Psychoanalysis and Transportation. • Psychoanalysis. Expenses for psychoanalysis are reimbursable.
• Psychologist. Expenses for psychological care are
• Qualified long-term care services. Cannot be reimbursed on
a tax-excludable basis through a flexible spending account on or after January 1, 1997. For this purpose, qualified long-term care expenses are defined in Code Section 7702B(c) as: necessary diagnostic, preventive, therapeutic, curing, treating, mitigating, and rehabilitative services, and maintenance or personal care services, which: (A) are required by chronically ill individual, and (B) are provided pursuant to a plan of care prescribed by a licensed health care practitioner. Thus, under the above definition, expenses that are otherwise deductible medical expenses may be long-term care expenses. Code Section 7702B(c)(2) defines a "chronically ill individual" to be a person who (among other things) is "certified" by a licensed health care practitioner as being unable to perform at least two activities of daily living for a period of at least 90 days due to a loss of functional capacity. • Radial Keratotomy. According to the IRS, radial keratotomy
(RK) is a deductible expense under Code Section 213 and thus reimbursable under a medical FSA. The IRS' view was stated in a June 1996 private letter ruling (PLR). Prior to this ruling, it was not clear whether the procedure, which involves eye surgery to correct nearsightedness, met the definition of medical care specified under Section 213 or whether it should be treated as cosmetic surgery, which cannot be reimbursed under a medical FSA. A 1994 court case supported the view that RK expenses are not reimbursable. In that case, a federal district court in South Carolina upheld a plan administrator's decision to deny reimbursement for RK on the basis that the procedure was experimental, not medically necessary, and for cosmetic purposes—all exclusions specified in the plan document. In its June 1996 PLR, however, the IRS took the opposite point of view. The IRS reasoned that RK is a surgical procedure affecting the structure or function of the body for the purpose of correcting a physical defect, and thus meets the Code Section 213 definition of medical care. Flex plan sponsors in the 4th Circuit—Maryland, North Carolina, South Carolina, Virginia and West Virginia—should probably continue following the South Carolina district court case mentioned above, since court decisions have higher precedential value than PLRs. Some insurance companies or TPAs, which are not bound by PLRs, may choose to continue disallowing reimbursement for RK expenses despite the new PLR. This might be because they continue to define the procedure as cosmetic surgery or simply because RK expenses are still defined in the administrative contract as nonreimbursable. The ruling did not address photorefractive keratectomy (PRK), a relatively new form of laser surgery that achieves the same goal as RK. Since the two procedures are so similar, however, it is reasonable to assume that the IRS would treat PRK the same as RK. • Reasonable and customary charges, amounts in excess of.
Medical expenses in excess of the plan's reasonable and customary charges are reimbursable. • Reconstructive Surgery Following Mastectomy. The IRS has
informally indicated that this would be considered cosmetic surgery. However, with the passage of WHCRA, it may become more likely that reconstructive surgery would be viewed as surgery "necessary to ameliorate a personal injury." • Resort. No.
• Retin-A.Reimbursable when prescribed by a physician for
• Rogaine. Reimbursable when prescribed by a physician for a
specific medical condition, but not for cosmetic purposes (that is, to stimulate hair growth). • Safety glasses. No.
• Schools, special. Expenses paid to a special school for a
mentally impaired or physically disabled person are reimbursable if the main reason for using the school is its resources for treating the disability. This includes the cost of a school that: Teaches Braille to a visually impaired child; Teaches lip-reading to a hearing-impaired child; Provides remedial language training to correct a condition caused by a birth defect. The cost of meals, lodging and ordinary education supplied by a special school is reimbursable only if the main reason for using the school is its resources for treating the mental or physical disability. The cost of sending a non-disabled "problem child" to a special school for benefits the child may get from the course of study and disciplinary methods is not reimbursable. However, the cost of ordinary instruction which a child would require in any event is not a medical expense and is not deductible. • Scientology "audits." Amounts paid to the Church of
Scientology for "audits" do not qualify as expenses for medical care. • Seeing-eye dog. See Guide dog.
• Sexual counseling. Expenses for counseling regarding sexual
inadequacy or incompatibility are reimbursable if the counseling is provided to a husband and/or wife by a psychiatrist. • Smoking cessation program. Amounts paid for participation in
a smoking cessation program are deductible, as are amounts paid for prescribed drugs. • Special foods. The costs of special foods and/or beverages—
even if prescribed—that substitute for other foods or beverages which a person would normally consume and which satisfy nutritional requirements (such as the consumption of bananas for potassium, for example) are not deductible. However, prescribed special foods or beverages are reimbursable if they are consumed primarily to alleviate or treat an illness or disease, and not for nutritional purposes. Special foods and beverages are reimbursable only to the extent that their cost is greater than the cost of the commonly available version of the same product. • Special foods - e.g., gluten free or salt free diet. Yes. If
prescribed to treat a specific illness or ailment, to the extent the cost of amounts paid exceeds cost of commonly available versions of the same product. No, if to promote general health. • Sterilization. The cost of a legal sterilization (a legally
performed operation to make a person unable to have children) is reimbursable. • Student health fee. No. Amounts paid are similar to HMO and
• Substance abuse. See Alcoholism and drug abuse.
• Swimming lessons. No. Not even if recommended by a doctor.
• Teeth whitening. No, not even if prescribed to treat a
• Telephone. The costs of purchasing and repairing special
telephone equipment that lets a hearing-impaired person communicate over a regular telephone are reimbursable. • Television. The cost of equipment that displays the audio part
of TV programs as subtitles for the hearing-impaired is reimbursable. This may include an adapter that attaches to a regular TV or the cost of a specially equipped TV in excess of the cost of the same model regular TV set. • Therapy. Amounts paid for therapy received as medical
treatment are reimbursable. Payments made to an individual for special exercises administered to a mentally disabled child are also reimbursable. These "patterning" exercises consist mainly of coordinated physical manipulation of the child's arms and legs to imitate crawling and other normal movements. (Also see Fitness programs.) • Transplants. Payments for surgical, hospital, laboratory and
transportation expenses for a prospective or actual donor of a kidney or other organ are reimbursable. • Transportation. Maybe. Amounts paid for transportation
primarily for, and essential to, medical care. Instead of actual car expenses, can deduct 12 cents a mile for use of car to obtain medical care, and parking fees and tolls can also be deducted. Companion travel expenses are not eligible unless necessary due to the patient's medical condition. Care should be taken to ensure that the transportation expense does not include a personal element - e.g., travel to the Mayo Clinic in winter would probably be okay, but travel to Arizona or California may not be if closer care is possible. • Trips. Amounts paid for transportation to another location, if the
trip is primarily for and essential to receiving medical services, are reimbursable. (Also see Lodging and meals.) A trip or vacation taken for a change in environment, improvement of morale or general improvement of health, is not reimbursable, even if it is taken at the advice of a doctor. • Tuition. Charges for medical care included in the tuition of a
college or private school are reimbursable if the charges are separately stated in the tuition bill. (Also see Learning disability and Schools, special.) • Tutor's fees. See Learning disability.
• Vacation. See Trips.
• Vaccines. Expenses for vaccines are reimbursable.
• Varicose veins. See Cosmetic surgery.
• Vasectomy. Medical expenses related to a vasectomy are
• Viagra. Yes, to the extent prescribed to treat a medical
• Vision care. Optometric services and medical expenses for
eyeglasses and contact lenses needed for medical reasons are reimbursable. Eye exams and expenses for contact lens solutions are also reimbursable. However, premiums for contact lens replacement insurance are not reimbursable. (Also see Radial keratotomy.) • Vitamins. Only expenses for vitamins prescribed by a physician
that are only available by prescription and are to treat a specific medical condition are reimbursable, and if legal in the United States. • Wage continuation policies. Premiums paid under wage
continuation policies are not reimbursable because they could provide benefits that would be received in a subsequent plan year, resulting in prohibited deferred compensation. • Weight loss program. The cost of a weight loss program for
general health is not reimbursable even if a doctor prescribes the program. However, if attendance at a weight loss program is prescribed by a physician to treat a medical illness (e.g., heart disease), the expense should be reimbursable. The physician should substantiate the necessity of this treatment. • Well baby care. See Nursing services.
• Wheelchair. Amounts paid for an autoette or a wheelchair used
mainly for the relief of sickness or disability, and not just to provide transportation to and from work, are reimbursable. The cost of operating and maintaining the autoette or wheelchair is also reimbursable. • Wigs. See Personal use items.
• X-ray fees. Amounts paid for X-rays taken for medical reasons
Capital expenses
Medical expenses incurred by employees for special equipment installed in the home or for improvements are reimbursable under a health FSA (subject to the discussion below) if their main purpose is medical care. Under Code Section 213, the cost of permanent improvements that increase the value of the property may be partly deducted as a medical expense. The cost of the improvement is reduced by the increase in the value of the property; the difference is a deductible medical expense. If the value of the property is not increased by the improvement, the entire cost is deductible as a medical expense. Improvements made to accommodate a residence for a person's disability do not usually increase the value of the residence, and the full cost is usually reimbursable. These improvements include, but are not limited to: • Constructing entrance or exit ramps; • Widening doorways at entrances or exits; • Widening or otherwise modifying hallways and interior • Installing railing, support bars or other modifications to • Lowering or making other modifications to kitchen cabinets and • Moving or otherwise modifying electrical outlets and fixtures; • Installing porch lifts and other forms of lifts (but generally not • Modifying fire alarms, smoke detectors and other warning • Adding handrails or grab bars; • Modifying hardware on doors; • Modifying areas in front entrance and exit doorways; and • Re-grading the ground to provide access to the residence. Only reasonable costs to accommodate a personal residence to a disabled condition are considered medical care. Additional costs for personal motives, such as for architectural or aesthetic reasons, are not reimbursable. Worksheet
The following worksheet may be used to figure the amount of a reimbursable capital expense. 1. Enter the cost of the improvement. $__________ . 2. Enter the increase in the value of the home. $__________ . If line 2 is equal to or greater than line 1, the amount is not reimbursable. If line 2 is less than line 1, go on to line 3. 3. Subtract line 2 from line 1. This is the deductible medical expense. Although a capital expense may be reimbursable under Section 213, it is not certain to what extent such an expense may be reimbursable under a health FSA. The flex plan proposed regulations prohibit as a benefit "deferred compensation." For this purpose, deferred compensation means the use of contributions "from one year to purchase a benefit that will be provided in a subsequent year." Since a capital expenditure by its nature has value over more than one year, reimbursement of such an expense might be considered deferred compensation. The IRS has not provided specific guidance on this point. Accordingly, a plan administrator may take one of three approaches: (1) not reimburse the expenditure at all (most conservative); (2) prorate the reimbursement over the useable life of the asset (a middle-ground approach); and (3) reimburse the entire expenditure in the year in which it is acquired (most aggressive). If a capital expense qualifies as a reimbursable medical expense, then expenses related to operation and maintenance also qualify as medical expenses, as long as the medical reason for the capital expense still exists. This is so even if none or only part of the original capital expense qualified as a medical care expense. Improvements to property rented by a person with disabilities Amounts paid by a person with disabilities to buy and install special plumbing fixtures, mainly for medical reasons, in a rented house are reimbursable medical expenses. For example, Don has arthritis and a heart condition. He cannot climb stairs or get into a bathtub. On his doctor's advice, he installs a bathroom with a shower stall on the first floor of his two-story rented house. Don's landlord did not pay any of the cost of buying and installing the special plumbing and did not lower the rent. Don can deduct the entire amount he paid. (See, however, the discussion above regarding the reimbursement through his health FSA of capital expenditures with a useful life over one year. The same issues apply to improvements.) This is a partial list of health care expenses that are not eligible
for reimbursement from your Health Care Spending Account
• Cosmetic surgery or procedures of any kind • Domestic help fees (for services of a non-medical nature) • Health club memberships • Lens replacement insurance • Physical therapy treatments for general well-being • Solutions for the care and maintenance of eyeglasses • Supplements prescribed by an alternative provider (e.g. • Union dues • Over-the-counter vitamins • Weight loss treatments and prescriptions (even if prescribed by a Eligible over the counter expenses include the following:
Ineligible health care expenses include the following:
These services are not eligible through a Health Care FSA under any
circumstances.
Family counseling Insurance Premiums Skin Health Club Dues Marriage Counseling Sonicare Documentation Required
There is a small group of items that may be allowed if and only if you
are diagnosed by a medical doctor (M.D.) with a specific medical
condition and that the specific item is medically necessary to treat the
condition. These items must be to treat the condition and cannot be
for preventative purposes.
Blood Pressure Machine Custom Orthodics Hormone Therapy Sunscreen Cayenne Pepper Fiber Supplements Massage Therapy Vitamins For example:
An individual suffers from anemia and the doctor prescribes iron supplements to treat the
anemia. The medical doctor would need to diagnose the participant with anemia and
provide a letter stating the diagnosis and that iron supplements are medically necessary to
treat the condition. The participant would need to be diagnosed with the condition in
order for the expense to be eligible. The iron could not be allowable for someone who
may be at risk for anemia and is taking it for preventative reasons.
Remember, it will be your responsibility to find out if a service is eligible before you sign
up for the benefit.

Source: http://allcarecareers.org/employee_section/employee_pdfs/flexible%20spending/flexspend_xpenses.pdf