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Adoption: FSA Eligibility

Once a child is adopted, medical expenses for the qualifying dependent child are eligible for reimbursement with a flexible spending account (FSA), health savings account (HSA), or a health reimbursement arrangement (HRA). These medical expenses are not eligible with a limited care flexible spending account (LCFSA), but may be eligible with a dependent care flexible spending account (DCFSA) if the account holders meet certain conditions. The fees associated with the adoption of a child are not eligible with any consumer spending accounts.

How does the adoption process work?

The adoption process can vary greatly from state to state, but in terms of tax purposes for the new parents, the following steps will need to be completed before an adopted child can be listed as a dependent on a tax return or qualify for dependent medical expenses.

  • Adoption Decree: This is the legal document that states that the adopted child is the legal child of the adoptive parent that is issued by the court. This is also called an adoption certificate.
  • Social Security Card: If the child already has a Social Security number upon adoption, parents have the option of keeping this number or having a new one assigned. The Social Security Administration should be contacted after the adoption to ensure that everything is registered correctly and the parents' status is correct.
  • Amended Birth Certificate: This certificate is issued after the child has been adopted, but it will list the adopted parents as the parents. The child will have both the amended birth certificate and the original birth certificate to use throughout life.

After an adopted child becomes a legal dependent, medical expenses for the qualifying dependent child will be eligible under FSAs, HSAs and HRAs. No fees associated with the adoption process are eligible for reimbursement, but these accounts can cover medical expenses for as long as they are listed as a dependent.

 
Flexible Spending Account (FSA) Limited Care FSA Dependent Care FSA Health Savings Account (HSA) Health Reimbursement Account (HRA)
Eligible
Eligible with Rx
Eligible with LMN
Not Eligible
 
 
Specifically Not Covered

Fees associated with the adoption of a child are not eligible.