What are the types of expenses that are FSA, HSA, and HRA eligible?

Drew Bowker on Jan 09, 2017

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You or your employees are eligible to use FSA, HSA, and HRA funds to cover certain medical, dental, and dependent care expenses depending on the account type.

First, let’s define what the government calls medical expenses.

Definition of Medical Expenses

Medical expenses are your out-of-pocket costs for diagnosis, cure, treatment, or prevention of a disease affecting any part of your body. This includes payments made to your physician, surgeon, dentist, and other medical practitioners, like your allergist or kidney specialist. It also includes the costs of any equipment you may need to buy such as crutches, medical supplies, and diagnostic devices needed, like a blood pressure monitor.

Medical expenses must be used primarily to treat or prevent a physical or mental problem or illness. For example, you can’t use your FSA, HSA, or HRA funds to cover expenses that make you generally healthy, like vitamins or a vacation.

FSA, HSA, and HRA Expenses Covered

The federal government lists qualified medical expenses that can be covered by these savings and reimbursement accounts in its Publication 502. For the most part, you can use your FSA, HSA, or HRA to cover copayments, deductibles, certain drugs, and some other health care costs up to a total of $2,550 per year.

For example:

If you have a deductible that you must reach before your health insurance starts to kick in, you can use your FSA, HSA, or HRA to cover those costs.
You can use these accounts to cover copayments for regular or emergency doctor or dentist visits.
If you owe for treatments or diagnostic services including medical or dental exams, X-rays, lab work required, and teeth cleanings, use your medical accounts to cover it.
You can use your savings or reimbursement accounts to cover prescriptions and some over the counter medications that are being prescribed or required by your physician. You can even cover the costs of medical equipment like crutches, bandages, and blood sugar test kits.

Non-Medical Expenses Covered by FSAs

A Dependent Care FSA lets you cover the costs of a babysitter or daycare provider who takes care of your children so that you can work. This includes the cost of after-school care, Pre-K programs, and day camps. They even cover the costs of caring for an adult dependent in case you have an incapacitated parent or grandparent living with you.

Health Care FSA funds can be used to pay for copays, deductibles, dental and vision expenses, health care services, prescription drugs, and some over-the-counter health care items for the enrollee and their dependents. Funds used for ineligible expenses may have to be repaid to the account. For Child & Elderly Care FSAs, see these examples of eligible expenses.

In general, Health Care FSA funds can be used to pay for copays, deductibles, dental and vision expenses, health care services, prescription drugs, and some over-the-counter health care items for you and your dependents.

In general, the following expenses are ineligible for Health Care FSA funds:

Any expenses that are merely beneficial to general health or aesthetics, such as vitamins, toothpaste, cosmetic surgery, or weight loss programs.
Insurance premiums are not an eligible FSA expense.
Non-prescription medication (over the counter drugs) are not eligible without a doctor’s note of medical necessity.
Massages are ineligible unless deemed a medical necessity with a doctor’s note.

Eligible Health Care FSA Expenses

Acupuncture	Humidifier (with a doctor’s note)
Adaptive equipment (e.g. raised toilet seat)	Hypnosis (with a doctor’s note)
Ambulance fees	Individual Counseling
Artificial limb or prosthesis	Insulin
Artificial teeth	Lab work
Bandage tape	Lactation consultants
Bandages	Lamaze
Birth control pills	Laser eye surgery
Blood pressure monitor	Massage (with a doctor’s note)
Braces (knee, ankle, wrist)	Medical abortion
Breast pumps & supplies	Medical alert bracelet & current year membership fees
Car adaptations (for persons with disabilities)	Mileage (to receive medical care)*
Chiropractic services	Non-cosmetic surgery
Co-insurance	Naturopathic Visits
Contact lens solution	Occupational Therapy
Contacts	Orthotics
Contraceptives	Physical exams
Copays	Physical therapy
CPAP machine	Pregnancy test
Crutches	Prenatal vitamins (with a doctor’s note)
Deductibles	Prescription drugs
Dental services (excludes veneers and other cosmetic procedures)	Prescription glasses
Diabetes testing supplies	Psychologist
Diabetic supplies	Reading glasses
Doctor visits	Saline Nasal Spray
Drug addiction treatment	Service animals
Eye drops	Speech Therapy
Eye exams	Sunscreen SPF 30 or greater (proof of SPF required)
Fertility treatment	Telephone equipment for hearing & visually impaired
First aid kits	Thermometer
Flu shots	Vaccinations
Hearing aids	Walker
Home medical equipment	Wheelchair & repair
Hormone therapy	X-rays
Hospital services (including meals and lodging)

Review a list of common eligible expenses in Zenefits, or IRS Publication 969 for a comprehensive list.

Non-Medical Expenses Covered by HSAs

An HSA functions similar to an IRA once you reach age 65 or later. You can withdraw funds for non-medical uses, but keep in mind that the funds will be subject to income taxes if not used to cover medical expenses.

Conclusion

The FSA, HSA, and HRA were created to provide you and your employees with tax-free options for managing the cost of healthcare. Your employees can save money by using them. Reach out to your health insurance broker, such as Zenefits, for more information.