Shedding light on the letter of medical necessity

Every year, as we approach open enrollment, we receive a lot of questions related to flexible spending accounts (FSAs). And discussing the letter of medical necessity (LMN) is always at the top of the list. So, since this is a column about the basics of FSA use, we're happy to cover it again because it's so important and can impact how you shop for FSA-eligible products and services.

If you've spent some time looking through our Eligibility List, you probably noticed that certain medical products and services require a "letter of medical necessity" in order to be eligible with your FSA.

In short, an LMN is like a doctor's note (although it can be provided by other medical practitioners as well). Having an LMN can help prove to your benefits administrator that the product or service was used for diagnosis, treatment, or mitigation of a specific medical condition, which is eligible, and not for general good health, which is not.

Defining "medical care"

For a product or service to be FSA-eligible, its primary purpose must be to treat, cure, diagnose or prevent a disease or illness. So a product like a first-aid kit is a no-brainer because they do not have a non-medical use.

However, there are many treatments and products that are not automatically eligible which can be made so with a Letter of Medical Necessity.

Here's an example: If your doctor suggests massage therapy to treat an injury, it's not FSA-eligible on its own. However, if you get an LMN from your doctor that outlines how the treatment method is essential to your recovery, your benefits administrator may accept it as an FSA-eligible expense.

How to submit a letter of medical necessity

If you and your doctor have identified a medical product or service that can aid the treatment of an injury or medical condition and it falls outside FSA eligibility, here's what you need to do:

  • Check with your benefits administrator to see if there is an official form to fill out for the expense to be approved.
  • If your doctor is writing a letter on his/her own, the letter must outline: what medical condition is being treated, a description of the treatment (frequency, dosage), and how long the expense will be needed to treat the condition.
  • A receipt or invoice must be submitted with the LMN for the full price to be reimbursed.

In some cases, benefits administrators may ask for additional information from your doctor, most likely for products/services that also have non-medical uses.

Beyond its direct medical use, most expenses are non-reimbursable if the individual would have purchased it anyway. In other words, this product can't be something you would purchase even if you didn't have the condition. It needs to be directly related to this course of treatment, and the specific use needs to be confirmed by a doctor or other medical practitioner.

One example is yoga. If you're already paying for yoga classes unrelated to a medical condition, your payments are not FSA-eligible, and these costs won't be covered retroactively. But if a physician recommends yoga to help a specific condition, they might submit an LMN on your behalf, to allow you to use tax-free funds to cover the costs of classes for a set period of time, until the doctor determines your treatment is complete.

With any luck, you shouldn't have any difficulties getting reimbursed for your expense as long as you keep an open line of communication with your benefits administrator and ensure that your physician is as detailed as possible.


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