Is home renovation due to a medical condition covered by my FSA?

Flexible Spending Account Eligible Expenses For Home

The answer to this question may surprise you. Yes, if home renovations help to accommodate a specific medical condition, then these could be covered by a Flexible Spending Account (FSA). While many people associate their FSA with usual medical costs such as co-pays and deductibles at the doctor’s office, or even medical products, many people are not aware that home renovation could be reimbursed as well.

According to the IRS, if the cost of improvements increases the value of a home in any way, then the cost of the improvements is reduced by the increase in value of a home. The difference would be deemed a medical expense. If the property value does not increase due to home improvements, then the entire cost can be included as an FSA eligible expense. In the case of home improvements to accommodate medical conditions, these often do not increase home values and can be included in full as FSA eligible expenses.

Who determines Eligibility?

The IRS provides detailed guidelines on what it considers acceptable (or “qualifying”) FSA eligible expenses. Home renovation is included on the IRS list of FSA eligible expenses. FSAstore.com also has an updated FSA Eligibility List, if you want to check which types of expenses would be covered by an FSA.

Special equipment can be installed in a home to treat a medical condition – whether it’s for you, a spouse or a dependent. Other construction costs for non-medical reasons do not qualify for FSA reimbursement.

Among FSA eligible expenses are:

  • Installing Entrance or exit ramps
  • Widening of doorways, modifying hallways or stairways
  • Lowering kitchen cabinets and other furniture
  • Installing railings or support bars
  • Moving certain fixtures
  • Renovation of bathrooms to install bars or other features
  • Installing lifts or porch lifts
  • Wheelchairs, walking aids (canes) and bathroom safety equipment are also FSA eligible items. BrowseHome Health Careto find these items.

The IRS also gives a good example of who may qualify:

Say that John has a heart condition and isn’t able to enter into a bathtub. He could use his FSA to have a bathroom installed on the first floor of his house. This could be an FSA eligible expense, since he needed this renovation to accommodate his medical symptoms. Again, if the cost of these home improvements does not increase the value of his home, then it could be included as an FSA eligible expense. If the cost does increase the home value, then the cost of renovations is reduced by the increase in his home value – and only the difference is deemed a medical expense.

The IRS has a “Capital Expense Worksheet” to help you calculate the cost of home renovation in terms of your medical expenses.

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