Baby Formula: FSA Eligibility

Baby Formula: requires a Letter of Medical Necessity (LMN) to be eligible with a Flexible Spending Account (FSA)

Baby formula is typically not eligible for reimbursement with flexible spending accounts (FSA), health savings accounts (HSA) or health reimbursement arrangements (HRA). The difference in cost of a specialized formula required for treatment of a medical condition may qualify for reimbursement with a Letter of Medical Necessity (LMN). Baby formula is not eligible for reimbursement with a limited care flexible spending account (LCFSA) or a dependent care flexible spending account (DCFSA).

What is baby formula?

Commercial baby formula ingredients vary widely from brand to brand, but the composition of the formula is designed to replicate the nutritional content of a mother's breast milk one to three months postpartum. The Food and Drug Administration (FDA) has regulated that all commercial baby formula products must contain 29 essential ingredients, but the base of the formula can vary. The most common types of baby formula include via Mayo Clinic:

  • Cow's Milk-Based - These formulas are chiefly designed to make it easier for babies to digest formula and closely resemble breast milk. However, because some babies could be allergic to the proteins found in cow's milk, other formula substitutes may be necessary.
  • Soy Milk-Based - Soy-based formulas are typically embraced by parents who wish to avoid animal-based foods and exclude them from their child's diet.
  • Protein Hydrolyzed Formula - These formulas are composed of proteins that have been partially broken down and fall into two categories: Partially Hydrolyzed and Extensively Hydrolyzed. Partially Hydrolyzed formulas have only a portion of the proteins broken down into short chains called peptides, while extensively hydrolyzed formulas have both peptides and free amino acids, the latter of which are classified as hypoallergenic.

Is baby formula FSA/HSA/HRA reimbursable?

Traditionally, the IRS views baby formula as a product necessary for the "general health" of the child, but outside the realm of consumer spending account reimbursement as it does not treat or alleviate a specific medical condition. Unfortunately, a mother's inability to breast feed will not qualify for reimbursement of baby formula. However, if the child has an allergy or a medical condition that calls for a specific type of formula, a benefits administrator may reimburse the difference in the cost of baby formula to treat a medical condition from regular baby formula.

To ensure that account holders will be fully reimbursed for the price difference in formula, a Letter of Medical Necessity (LMN) may be necessary. This must outline a specific diagnosis about how a specific type of formula will be used to alleviate the issue.

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    Specifically Not Covered

    Baby formula for general use is not eligible. Your administrator may only reimburse the difference in the cost of baby formula to treat a medical condition from regular baby formula.

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