Which Expenses Qualify?

There are four main types of accounts you can participate in with the Flexible Spending Account Plan:

Click here for a printer-friendly list of health care expenses and OTC items that qualify/do not qualify for reimbursement.
(Plan restrictions may apply. Check with your plan administrator.)

Health Care Reimbursement Account
Prescription (Rx) required as of 1/1/2011

This account reimburses you for health care expenses that are not covered by insurance.

You set aside money, before taxes, through regular payroll deductions. During the year, the plan reimburses you directly from your account for any qualified health care expenses you've paid that are not covered by insurance.

Common expenses that qualify for reimbursement include:

Co-payments (doctor, dental, vision, pharmacy)

Deductibles

Prescribed medicines

Over-the-counter drugs that are medically necessary like allergy medications, aspirin or antacids.

Dietary supplements and vitamins with doctor's letter of medical necessity

Dental fees (cosmetic procedures not eligible)

Eye surgery, glasses and contacts

Weight-loss programs with a doctor's letter of medical necessity

Weight-loss over-the-counter drugs (Rx)

Chiropractors

Vitamins with doctor's letter of medical necessity

Psychiatrists and psychologist fees

Smoking-cessation programs

Smoking-cessation over-the-counter drugs (Rx)

List of expenses

Dependent Care Account

This account reimburses you for day care expenses for eligible children and adults. Through regular payroll deductions, you set aside part of your income to pay for these expenses on a tax-free basis.

To qualify, your dependent(s) must be:

A child under the age of 13 or,

A child, spouse or other dependent who is physically or mentally incapable of self-care and spends at least eight hours a day in your household.

Please Note: If your family's annual income is over $20,000, this reimbursement option will most likely save you more money than the dependent care tax credit you take on your tax return. You will also receive your tax savings in each paycheck, rather than once a year when you file your taxes.

List of expenses

Insurance Premium Account

This account allows you to pay for your health and other insurance premiums with tax-free dollars.

If you are covered under your employer's health and/or other insurance plans, you may be automatically enrolled in this account!

Be sure to check your Summary Plan Description for any additional rights or benefits provided by your company's plan.

List of expenses

Adoption Assistance

If you adopt a child, an FSA can reimburse up to $12,650 of adoption expenses in 2012.

You can only take the reimbursement once per child. So, if the adoption process spans several years, you need to consider which year is best (tax-wise) for taking the reimbursement.

This benefit is gradually phased out based on your income level.

You may also benefit by using the adoption assistance as a tax credit on your IRS Form 1040. The 2012 limit of $12,650 is the same as if the reimbursement is filed through your FSA.

However, if you fall in the 27% tax bracket or higher, paying for adoption expenses through the FSA will probably save you more money than taking the tax credit.

In 2012, if you have more than $12,650 in qualifying adoption assistance expenses you may be able to be reimbursed up to the FSA dollar limit established by your employer's Cafeteria Plan and utilize the tax credit for additional qualified adoption expenses you have incurred.

List of expenses