Blood Storage: FSA Eligibility

Blood Storage: requires a Letter of Medical Necessity (LMN) to be eligible with a Flexible Savings Account (FSA)
Blood storage reimbursement is sometimes eligible if it is needed to treat an existing or imminently probable disease. A Letter of Medical Necessity (LMN) is usually required for reimbursement through a flexible spending account (FSA), health savings account (HSA) and a health reimbursement arrangement (HRA). Blood storage reimbursement is not eligible with a limited-purpose flexible spending account (LPFSA) or a dependent care flexible spending account (DCFSA).

Blood storage as a precautionary measure to treat a disease that may or may not develop in the future is not eligible.

Information Letter 2010-0107; Private Letter Ruling 200140017

How is blood storage used to treat diseases?

Blood storage is the primary service performed by blood banks, which attempt to preserve life-saving blood components to make them available for transfusion for patients when they need it most. However, there are two primary types of blood storage, public and private. Public blood storage is used to supply hospitals and other medical centers with blood and its separate components for transfusions. This is done on a voluntary basis by donors and can be used by medical professionals as they see fit to treat a wide variety of medical conditions (AABB).

While the vast majority of blood storage is conducted for public use, individuals can pay for the services of a cord blood bank. When a baby is born, parents will have the option to store the blood found inside the umbilical cord of a newborn baby, which is rich in blood stem cells, which have the ability to reproduce themselves into other types of cells. These cells can play a vital role in treating medical conditions like leukemia, sickle cell anemia or lymphoma, as injecting these cells can replenish a patient's blood supply with new, healthy cells. Cord blood cells can also be used to help the body recover from intensive cancer treatments like chemotherapy or radiation (U.S. Food and Drug Administration).

When a child is born, parents will have the option of paying to preserve this cord blood for their family member's future use by paying to store it in a private cord blood bank, having it disposed of or donating it to a public bank so it can be freely used by medical professionals to treat a wide range of potential medical conditions. While benefits administrators can vary in their rulings of whether blood storage is an eligible medical expense, a Letter of Medical Necessity (LMN) from a physician is recommended for reimbursement. This will outline how blood storage will be used to treat an existing medical condition, or if a child has shown a predisposition for a certain illness that is imminently probable, it will most likely be eligible for reimbursement through a consumer-directed healthcare plan.