What Does OTC Cover? Medications, Menstrual Care, and Sunscreen

Most over-the-counter medications and health products count as HSA and FSA eligible OTC items, meaning you can pay for them with pre-tax dollars from your account. Since the CARES Act took effect for expenses paid after December 31, 2019, pain relievers, cold and allergy medicine, digestive aids, menstrual products, and first-aid supplies no longer need a prescription to qualify.¹ A smaller group of items still requires a doctor’s letter, and some products people assume are covered are not.

OTC Medications You Can Buy Without a Prescription

Any medication sold off the shelf without a prescription is now eligible for HSA, FSA, HRA, and Archer MSA spending.¹ In practice, that covers most of the pharmacy aisle:

Pain relief: acetaminophen, ibuprofen, naproxen, aspirin, topical pain patches, and muscle rubs
Cold, cough, and flu: decongestants, nasal sprays, cough suppressants, throat lozenges, and multi-symptom liquid remedies
Digestive health: antacids, laxatives, anti-diarrheal medications, and acid reducers
Allergy: antihistamines, allergy eye drops, and nasal corticosteroid sprays
Skin treatments: anti-itch creams, antifungal treatments, and acne medications intended to treat a medical condition

The line to watch is medicine versus supplement. A bottle of ibuprofen qualifies. A general multivitamin does not, unless a doctor has prescribed it for a diagnosed condition.

Menstrual Care and Contraceptives

The CARES Act specifically added menstrual care products, including tampons, pads, liners, menstrual cups, and sponges.¹ No prescription or letter is required, and it doesn’t matter whether you buy them at a pharmacy, grocery store, or online.

Condoms are eligible as an over-the-counter contraceptive. IRS Publication 502 also lists prescribed birth control pills as includible medical expenses, though those fall outside the OTC category.²

Sunscreen and First-Aid Supplies

Sunscreen qualifies when it has an SPF of 15 or higher and provides broad-spectrum protection, because the FDA classifies these products as OTC drugs for skin cancer prevention. A cosmetic tanning product without an SPF drug facts label may not qualify, so check the packaging before you swipe your benefits card.

First-aid supplies have always been eligible. Adhesive bandages, sterile gauze, antiseptic wipes, medical tape, elastic wraps, and wound closure strips all count. If it’s designed to treat or prevent injury or infection, it almost certainly qualifies.

Diagnostic Devices and Vision Supplies

Devices used to diagnose or monitor a health condition are eligible without a prescription. That includes thermometers, blood pressure monitors, pulse oximeters, and blood glucose test kits and strips.

For vision care, Publication 502 allows eyeglasses and contact lenses needed for medical reasons, plus related supplies like saline solution and enzyme cleaner.² Many administrators also accept non-prescription reading glasses, though the IRS guidance technically requires a medical reason for eyeglasses. A quick note from your eye doctor resolves any pushback.

Items That Need a Letter of Medical Necessity

Some products fall between medical treatment and general wellness. A Letter of Medical Necessity from your doctor can make them eligible. Publication 502 flags several categories that require physician involvement:²

Vitamins and supplements are not eligible unless a medical practitioner recommends them to treat a specific diagnosed condition. A general recommendation to “take vitamin D for health” isn’t enough.
Special dietary food is eligible only if the food doesn’t satisfy normal nutritional needs, is used to treat an illness, and a physician substantiates the need. You can only claim the amount that exceeds what a normal diet would cost.
Weight-loss programs qualify only when weight loss is treatment for a specific disease diagnosed by a physician, such as obesity or heart disease.
Air purifiers and HEPA filters can be reimbursed with a Letter of Medical Necessity signed by your doctor, according to the federal employees’ FSA program.³

The letter itself is short. Your doctor identifies the diagnosed condition, names the recommended product or treatment, and notes how long you’ll need it. Submit it with your claim or receipt. Without it, the administrator will deny the claim and the amount becomes a non-qualified distribution.

What’s Not Eligible

Cosmetic procedures and products are excluded unless they correct a deformity from a congenital abnormality, accident, or disfiguring disease. Teeth whitening, anti-aging creams, and elective cosmetic procedures don’t qualify.

General fitness expenses also miss the mark. Gym memberships, treadmills, and fitness trackers fail because they benefit general health rather than treat a specific condition. Toiletries like toothpaste, shampoo, and deodorant are out for the same reason. Publication 502 draws the line at expenses that are “merely beneficial to general health.”²

Nicotine patches and gum are a surprising exclusion. Publication 502 specifically states that OTC drugs designed to help stop smoking, including nicotine gum and patches, cannot be included in medical expenses. Prescription smoking cessation medications, however, are eligible.²

Paying and Keeping Records

Most plans issue a benefits debit card. Larger retailers use an inventory information approval system that automatically flags eligible items at checkout, so the card only approves qualifying products. If you buy an eligible item with your own money, submit a claim to your plan administrator with the itemized receipt for reimbursement, typically by direct deposit within a few business days.⁴

Keep every itemized receipt. Administrators can audit transactions, and the IRS requires records showing each distribution went to a qualified medical expense.⁵ A credit card statement won’t cut it because it doesn’t show what you bought. The typical trouble spot: mixing eligible and non-eligible items in one transaction, paying with the benefits card, and failing to document the split later.

Spending on Family Members

HSA and FSA funds cover qualified expenses for your spouse and any tax dependents.⁵ HSAs stretch further to include someone who would have qualified as your dependent except that they filed a joint return or had income above the exemption. For divorced or separated parents, a child is treated as the dependent of both parents for HSA purposes, regardless of who claims the exemption.

FSAs also cover your child under age 27 at year’s end, even if the child isn’t your tax dependent. That helps parents cover adult children who have aged out of dependency but still turn up with medical bills.

FSA Deadlines vs. HSA Rollover

FSAs run on a use-it-or-lose-it rule. Your employer’s plan may soften it in one of two ways, but not both: a grace period of up to two and a half months after the plan year ends, or a carryover of up to $680 from the 2026 plan year into 2027 if you re-enroll. Anything above $680 is forfeited.⁶

Even with a grace period or carryover, there’s still a claims filing deadline. For federal employees it’s April 30 following the benefit period; private plans set their own run-out dates.⁶ If you’ve been paying out of pocket for OTC items and planning to submit receipts later, missing the deadline means you eat the cost. Late November is a good time to check your balance and stock up on eligible items you’ll use anyway.

HSAs are different. No spending deadline, no forfeiture, balance rolls over indefinitely. That’s the main practical advantage for OTC purchases.

What Happens If You Buy Something That Isn’t Eligible

Spending HSA funds on a non-qualified expense triggers income tax on the distribution plus a 20% additional tax if you’re under 65. The penalty disappears at age 65 or on disability, though you still owe regular income tax on non-medical withdrawals.⁵ The 20% hit is why keeping receipts and knowing what qualifies pays off.

FSA penalties look different because the money is disbursed by your employer’s plan administrator, who is supposed to verify eligibility before releasing funds. If a non-qualified expense gets through, the administrator may require you to return the funds or offset the amount against future claims. Either way, the tax consequences land on you.

Medicare Advantage OTC Allowances Are Not the Same Thing

If you’ve seen ads for Medicare Advantage plans offering OTC benefits, those work nothing like an HSA or FSA. A Medicare Advantage OTC allowance is a fixed quarterly subsidy, often loaded onto a pre-paid card, that the insurer provides as a supplemental benefit under Part C.⁷ The plan sets the amount, the approved product list, and the retailers. Unused funds typically expire each quarter. You can’t use them for a spouse or dependent, and enrolling in Medicare generally disqualifies you from making new HSA contributions, though you can still spend an existing HSA balance on qualified expenses.

1
Internal Revenue Service. IRS Outlines Changes to Health Care Spending Available Under CARES Act
2
Internal Revenue Service. Publication 502 (2025), Medical and Dental Expenses
3
FSAFEDS. Eligible Health Care FSA (HC FSA) Expenses
4
FSAFEDS. How Long Will It Take to Receive Reimbursement
5
Internal Revenue Service. Publication 969 (2025), Health Savings Accounts and Other Tax-Favored Health Plans
6
FSAFEDS. What Is the Use or Lose Rule?
7
Centers for Medicare & Medicaid Services (CMS). Medicare Managed Care Manual – Chapter 4 – Benefits and Beneficiary Protections