Infant Formula: FSA Eligibility

Infant Formula: requires a Letter of Medical Necessity (LMN) to be eligible with a Flexible Savings Account (FSA)
Infant formula is typically not eligible for reimbursement with flexible spending account (FSA), health savings account (HSA) or health reimbursement arrangement (HRA). When there is a medical condition that requires use a specific type of formula, administrators may or may not reimburse the difference in cost with a Letter of Medical Necessity (LMN). Infant formula is not eligible for reimbursement with a limited-purpose flexible spending account (LPFSA) or a dependent care flexible spending account (DCFSA).

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 (ScienceDirect). 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 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 infant formula FSA/HSA/HRA reimbursable?

Traditionally, the IRS views infant formula as a "food" and 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 reimburse the difference in the cost of infant formula to treat a medical condition from regular infant formula with documentation to show that the specialized formula is necessary (such as a Letter of Medical Necessity (LMN)).