Flexible Spending Account FAQ

Flexible Spending Accounts Defined

Flexible Spending Accounts (FSA’s), known also as Reimbursement Accounts, are authorized by Section 125 of the IRS Code.  FSA’s provide valuable benefits where both employer and employees save significant amounts on taxes and where employees have some freedom of choice in designing their own benefit packages.  They allow employees to pay for qualified unreimbursed medical expenses with pretax dollars.  This helps make these expenses more affordable.

Frequently Asked Questions

Maximizing Your Employee Benefits

A Flexible Spending Account can save you money by using before-tax dollars for unreimbursed medical expenses but requires careful planning.  Keep in mind that money deducted from your pay and deposited in your flexible spending account must be applied to expenses incurred during the Plan Year.  Eligible expenses must be received no later than March 31st.  What about carry over? Up to $500 of unused funds can be carried over to the next year.  Any unused funds in excess of $500 will be forfeited.


Following is a partial list of eligible and non-eligible expenses for reimbursement under this Plan.  A comprehensive listing of eligible and non-eligible expenses can be found in IRS publication #502. (available from the IRS at 1-800-829-3676).  These lists are subject to change.


What are eligible medical care expenses?

  • Deductibles and Co-insurance for medical and dental.
  • Prescription Drug co-pays
  • Prescriptions not covered by the plan
  • Any co-insurance amounts required by the plan
  • Any office visit co-payments required by the plan
  • Expenses for care and treatment exceeding the limits of the plan
  • Expenses not covered by the plan due to a pre-existing condition
  • Charges over the usual and customary limits
  • Eye Exams and Corrective lenses
  • Hearing aids and batteries
  • Qualified expenses not covered as a result of not being a participant in the ABC Company Health Care Plan.
  • Over-the-counter drugs used to treat a medical condition *Written prescription from Physician required (See page 2)
  • Charges for Orthodontia treatment.
  • Lasik eye surgery.


What are non-eligible expenses?

  • Premiums for insurance coverage
  • Dietary Supplements, such as vitamins, taken for general health purposes.
  • Vacations taken for health purposes
  • Maternity clothes, diaper service, etc.
  • Funeral and burial expenses
  • Cosmetics and toiletries
  • Uniforms
  • Marriage or family counseling
  • Health club dues
  • Domestic help
  • Mechanical exercise device not prescribed by a physician
  • Wigs not considered medically necessary
  • Dust elimination systems
  • Nursemaids or practical nurses who provide general care for healthy infants
  • Custodial care in an institution
  • Self help medical expenses
  • Fees for physical treatments (massages, exercise classes, and health club fees that are not prescribed by a Physician and are unrelated to a specific health problem, fees for weight loss and smoking cessation programs for general health purposes, and fees for hair transplant or replacement procedures/treatment)
  • Medical expenses which are claimed on tax returns
  • Transportation expenses to and from work even though a physical condition may require special means of transportation.


Following is a partial list of eligible and non-eligible “over-the-counter” expenses for reimbursement under this Plan. These lists are subject to change.


What are eligible “over-the-counter” expenses that require a prescription?


Acne medication

Allergy medications


Antibiotic creams

Anti-diarrhea medications

Anti-fungal medications

Anti-itch medications

Anti-gas medications

Bug bite medication

Calamine Lotion

Cold medications

Cough/Cold/Flu/Fever reducers

Diaper rash ointments

Ear care/swimmer’s ear

Eye drops

First aid creams/ointments

Head lice treatment

Heartburn/indigestion medications

Hemorrhoid creams/suppositories


Medicated cleanser/soap

Menstrual cramp/pain products

Motion sickness pills

Mouth pain

Nasal decongestant

Nausea/vomiting remedies

Nicotine gum/patches

Ointments for burns/sunburn

Pain relievers/fever reducers

Pain relievers/muscle pain

Pedialyte for child’s dehydration

Pinworm treatment

Poison treatment

Rashes:  diaper rash/fever blisters

Rashes:  poison oak/ivy/sumac

Sinus medications

Sleeping aids for insomnia

Smoking cessation treatment

Vaginal product/yeast infection

Wart removal treatments


What are eligible “over-the-counter” expenses that DO NOT require a prescription?


Bandages (Band-aids)

Blood pressure monitors

Carpal tunnel (wrist) support

Cold/hot packs for injuries

Condoms (contraceptives)

Contact lens solutions

Contraceptive pills/suppository


Diabetic supplies


Hearing aid batteries

Incontinence supplies

Liquid adhesive

Night guards for teeth grinding

Pregnancy test kits

Reading glasses

Spermicidal foam - contraceptives



What are non-eligible “over-the-counter” expenses?


Chapstick/lip balm

Cleansers or soap that are considered toiletries (non-medicated)

Cosmetic products of any kind

Dental floss




Skin moisturizers/lotions

Suntan lotion


Teeth whitening products



Vitamins – used to improve or maintain general health


*None of the above items are eligible for the Flexible Spending Account