Infant Formula: FSA Eligibility

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

What is infant formula?

Commercial infant 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 infant formula products must contain 29 essential ingredients, but the base of the formula can vary. The most common types of infant 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.

Is infant formula FSA/HSA/HRA reimbursable?

Traditionally, the IRS views infant 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 infant formula to treat a medical condition from regular infant 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 infant formula will last and another LMN must be submitted if the treatment exceeds the current plan year.

Infant Formula: Best Sellers


Eligibility Table

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

 


AZ-PROD-WEB02 11/24/2017 12:42:11 PM