Flexible Spending Accounts and Letters of Medical Necessity

It can sometimes be difficult to tell what expenses are covered by a Flexible Spending Account (FSA). There is such a wide variety of ailments and conditions, and deciphering what's eligible with an FSA can occasionally be tricky.

Products and services that have the primary purpose of preventing, treating or mitigating a specific medical condition are considered qualified medical expenses by the IRS, and are therefore eligible for reimbursement with an FSA. Items and services that have both a medical and personal use/general good health component, such as Yoga, will require further documentation in order to be considered eligible. This is typically accomplished with a Letter of Medical Necessity (LMN).

At FSA Store, we carry thousands of products that are fully FSA eligible without the need for additional documentation to substantiate them as medical expenses. However, outside of FSA Store you may encounter products and services that require an LMN to be eligible.

What is a Letter of Medical Necessity? Let's define it.

A letter of medical necessity is a letter from your doctor or other medical practitioner explaining why an item or service is recommended to treat or mitigate a specific health condition. Essentially, it ensures that the FSA participant is purchasing the product for medical and not personal use.

The LMN will typically indicate factors such as a disease that the item may be necessary to treat, what the necessary treatment would be, how long the treatment should last, etc.

Some examples of items and services that may require a letter of medical necessity include:

1. Baby Formula

Regular baby formula is not an eligible expense as it is considered a food that satisfies a normal nutritional requirement, and not a treatment for a medical condition. However, if your baby requires a special formula to treat an illness or disorder, the difference in cost between the special formula and routine baby formula may be reimbursed with your FSA with a letter of medical necessity.

2. Breast Reduction

Breast reduction for cosmetic purposes is not an eligible expense. However, if the procedure is recommended by a medical practitioner to treat a condition such as chronic pain or another medical issue, it may be eligible with an LMN.

3. Dietary Supplements

Most vitamins and dietary supplements are not considered eligible, with the exception of prenatal vitamins and glucosamine products for joint pain that are available at FSA Store. All other vitamins and supplements would require an LMN to be eligible.

4. Counseling: Some require letter of medical necessity, some ineligible

Counseling must be provided to treat a medical or mental diagnosis and be rendered by a licensed provider. Diagnosis examples include bereavement, behavior modification, psychoanalysis, and psychotherapy. Life coaching, career counseling and marriage counseling do not qualify for FSA reimbursement.

5. Humidifiers

Humidifiers are generally not a qualified expense, unless they are recommended by a doctor or medical practitioner to treat a specific medical condition, in which case they may qualify with an LMN.

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