Formula: FSA Eligibility

Formula is not eligible for reimbursement with a limited care flexible spending account (LCFSA) or a dependent care flexible spending account (DCFSA). Formula is eligible for reimbursement with a flexible spending account (FSA), health savings account (HSA) and health reimbursement arrangement (HRA) with a Letter of Medical Necessity (LMN) from a doctor stating that the formula is necessary to treat a medical condition.

What is 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:

  • 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.

How do I obtain a Letter of Medical Necessity (LMN) for formula?

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. However, if the child has an allergy or a medical condition that calls for a specific type of formula, a benefits administrator may only 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 be completed by a physician and will outline a specific diagnosis about how a specific type of formula will be used to alleviate the issue. Additionally, the physician must outline how long the use of this formula will last and another LMN must be submitted if the treatment exceeds the current plan year.

Eligibility Table

Flexible Spending Account (FSA) Limited Care FSA Dependent Care FSA Health Savings Account (HSA) Health Reimbursement Account (HRA)


Eligible with Rx

Eligible with LMN

Not Eligible

Legal Information / Regulations

Private Letter Ruling 200941003; Information Letter 2008-0039


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