FSA and HSA Eligible Expenses: Rules, Limits, and Documentation

FSA and HSA eligible expenses are costs whose primary purpose is diagnosing, treating, or preventing a specific medical condition — the standard the IRS uses for both accounts. That covers the obvious out-of-pocket items like copays, prescriptions, and dental work, and it also covers a long list of over-the-counter products, medical supplies, and transportation to care. It does not cover anything meant to improve general health or personal appearance, and the line between the two is where most reimbursement questions get decided.

The Test That Decides Eligibility

Internal Revenue Code Section 213(d) sets the definition both accounts follow. “Medical care” means amounts paid for treating, diagnosing, or preventing disease, plus costs that affect any structure or function of the body. Transportation essential to receiving that care and qualified long-term care services are included.¹

Purpose is what matters. An expense qualifies only when its primary aim is to address a specific medical condition, not to improve general wellbeing. A gym membership for overall fitness fails the test. A medically prescribed exercise program to rehabilitate a cardiac condition can pass it. A vacation to reduce stress does not qualify even if a doctor recommends it, because it does not target a diagnosed illness. Hold that distinction in mind and most of the specific rules below explain themselves.

Medical Services and Treatments

Most professional care from a licensed provider qualifies for both FSAs and HSAs. That includes the everyday costs insurance leaves behind: copays, deductibles, and coinsurance. Hospital stays, surgical procedures, and lab work are eligible. So are diagnostic tests such as blood work, X-rays, and MRIs.

Specialized treatments qualify when they address a specific condition. Physical therapy for injury rehabilitation, psychiatric care for a mental health diagnosis, chiropractic adjustments, and acupuncture are common examples. The treatment has to target a diagnosed ailment rather than serve a purely wellness or relaxation purpose.

Transportation costs tied to medical care are also eligible. Ambulance fees qualify. If you drive yourself to appointments, you can claim reimbursement at the IRS standard medical mileage rate, which is 20.5 cents per mile for 2026.² Parking and tolls paid during medical trips are reimbursable too.

Costs to buy, train, and maintain a service animal are eligible when the animal assists someone with a physical disability, vision impairment, or hearing loss. Maintenance includes food, grooming, and veterinary care needed to keep the animal healthy enough to perform its duties.³

Over-the-Counter Products and Supplies

The CARES Act, signed in March 2020, removed the prescription requirement for over-the-counter medications purchased with FSA or HSA funds. Pain relievers, allergy medications, cold and flu treatments, antacids, and sleep aids are all reimbursable without a doctor’s note.⁴

The same legislation added menstrual care products to the qualified list, including tampons, pads, liners, cups, and sponges.⁴ Other eligible supplies include:

First-aid items such as bandages, gauze, antiseptic wipes, and thermometers
Diagnostic tools including blood pressure monitors, pregnancy tests, glucose monitors, and pulse oximeters
Sunscreen with SPF 15 or higher, because it protects against skin disease
Contact lens cleaning and disinfecting solution

Non-medicated personal care items are not eligible even though they sit on the same shelves. Toothbrushes, toothpaste, nail clippers, and cosmetic products are all excluded.⁵

Vision and Dental Care

Vision and dental care are standard eligible categories, even when separate insurance covers them. Account funds can pay for comprehensive eye exams, prescription eyeglasses, contact lenses, and corrective procedures such as LASIK.

On the dental side, routine cleanings, fillings, extractions, crowns, and root canals qualify. Braces and clear aligners are eligible because they correct functional alignment issues. Cosmetic dental work does not qualify: teeth whitening, veneers placed solely for appearance, and purely aesthetic bonding are excluded because they do not treat a medical or dental condition.³ Bonding that repairs a chipped or cracked tooth can qualify because it restores function.

Vitamins, Supplements, and Dual-Purpose Items

Daily multivitamins and dietary supplements taken for general wellness are not eligible. The IRS classifies these as dual-purpose items because they benefit overall health rather than target a specific condition.³

Vitamins and supplements can become eligible when a doctor recommends them to treat or prevent a diagnosed condition. In those cases you typically need a Letter of Medical Necessity that states the condition being treated, the name and dosage of the supplement, and the expected duration of use. Common examples include iron for anemia, vitamin D for a diagnosed deficiency, and calcium for osteoporosis prevention.

Prenatal vitamins are a notable exception. Because pregnancy is a medical condition, prenatal vitamins generally qualify without additional documentation. Fiber supplements used to treat constipation and glucosamine for diagnosed joint conditions are often handled the same way.

What Does Not Qualify

Any expense that only benefits general health, without targeting a specific condition, falls outside the definition. The IRS has called out several categories by name:

Cosmetic surgery, including face lifts, hair transplants, liposuction, and electrolysis, unless the procedure corrects a deformity from a congenital abnormality, accident, or disfiguring disease³
Teeth whitening, considered cosmetic even when performed by a dentist
Diet food and beverages, because they substitute for what you would normally eat, even as part of a weight-loss plan
Maternity clothes, excluded regardless of medical need during pregnancy
Gym memberships and fitness programs, unless prescribed to treat a diagnosed condition and supported by a Letter of Medical Necessity
Diapers, unless medically needed to treat the effects of a specific disease

The general rule: if the item or service would be a personal, family, or lifestyle expense in the absence of a medical condition, it does not qualify.³

Insurance Premiums

FSAs generally cannot pay for insurance premiums. HSAs can, but only in specific categories:

COBRA continuation coverage premiums after leaving a job
Health coverage premiums during a period when you collect unemployment benefits
Medicare Parts A, B, and D and Medicare Advantage premiums, once you reach 65
Qualified long-term care insurance premiums, up to age-adjusted limits

Medicare supplement (Medigap) premiums are the exception within that group and cannot be paid with HSA funds.⁶ Ordinary health insurance premiums outside of the categories above are also not HSA-eligible.

Documentation You Need to Keep

Good records protect you from denied claims and tax trouble. For every eligible expense, keep an itemized receipt showing the date of service, the provider or retailer name, and a description of the product or treatment. Credit card statements and canceled checks are not enough by themselves; the IRS wants documentation that identifies what was purchased.⁷

For insurance-covered services, an Explanation of Benefits from your insurer showing the amount you owe is valid proof. Dual-purpose items such as exercise equipment prescribed for rehabilitation or vitamins recommended for a specific deficiency require a Letter of Medical Necessity from your doctor identifying the condition being treated, the item prescribed, and the expected duration of use.⁷

Most plans provide a debit card for point-of-sale purchases at pharmacies and medical offices. When you pay out of pocket without the card, you submit a claim through your administrator’s portal by uploading the required documentation. Processing typically takes five to ten business days, and reimbursement arrives by direct deposit or check. Hold on to receipts and Letters of Medical Necessity for at least three years, since the IRS can request them during an audit.

What Happens If You Spend on Something Ineligible

The consequences differ by account. If an FSA debit card is used for an ineligible item, whether accidentally or on purpose, you are responsible for reimbursing your account. Your administrator may deactivate your benefits card until the balance is repaid. You can also substitute eligible receipts to offset the ineligible charge.

An HSA carries higher stakes. Any distribution not used for a qualified medical expense is included in your gross income for the year and hit with an additional 20% tax.⁸ The 20% penalty disappears once you reach 65 or become disabled. After 65, non-medical withdrawals are still taxed as ordinary income, but the extra penalty no longer applies.

1
Office of the Law Revision Counsel. 26 USC 213 – Medical, Dental, Etc., Expenses
2
Internal Revenue Service. 2026 Standard Mileage Rates
3
Internal Revenue Service. Publication 502, Medical and Dental Expenses
4
Internal Revenue Service. IRS Outlines Changes to Health Care Spending Available Under CARES Act
5
FSAFEDS. What Kind of Over-the-Counter Medicines or Products Are Eligible for Reimbursement Through My HCFSA?
6
Legal Information Institute. 26 USC 223 – Health Savings Accounts
7
FSAFEDS. Eligible Health Care FSA (HC FSA) Expenses
8
Internal Revenue Service. Publication 969, Health Savings Accounts and Other Tax-Favored Health Plans