Asked and Answered: Can I use FSA funds for service animals?

Most people think of using their HSA and FSA funds on medical treatment and material goods. That's usually the case, but medically eligible expenses can also include something a little more lively - namely, your service animal. If your furry friend is part of a medical treatment strategy, there's a good chance that some of your associated expenses will be eligible.

But as with many healthcare costs, there are certain requirements that must be met in order to use your HSA or FSA on a service animal. Before you go buy a new frisbee for Fido with your card, read below for the important details.

When it's okay to use FSA funds for service animals

A service animal provides necessary medical assistance, such as a seeing eye dog for the visually impaired or a pet that senses blood sugar changes in a diabetic. Service animals are legally recognized and protected against housing and business discrimination.

To use your HSA or FSA for a service animal, your medical professional typically has to write a Letter of Medical Necessity (LMN). This letter must show that you require an animal for your medical needs and that its primary function is for your health and not companionship.

What eligible items you can buy

According to the IRS, you can use your FSA for any expenses associated with your service animal, including food, training and veterinary costs. Costs paid for by the FSA must help the animal do its job. A harness that says "Service Dog" may be eligible, while a new doggie bed may not. You can also use your FSA to pay for a new service animal.

You can pay for those expenses directly with your FSA card, or use a different debit or credit card and reimburse yourself from your FSA. As with any expense, keep your receipt in case your FSA administrator requires documentation.

Does this apply to emotional support animals?

Emotional support animals (ESA) refer to two types of service animals - those that help people with a mental illness like anxiety or depression, and therapy or comfort animals that help people going through a hard time.

ESAs that help patients with PTSD or other mental illnesses may be HSA-eligible or FSA-eligible, especially if your doctor can write a LMN proving how the animal will help you more than medication or other forms of treatment.

Comfort or therapy animals are different. These are primarily animals that offer support to those in hospice, retirement homes or undergoing cancer treatment. If you care for an animal that you bring with you to a nursing home, you can't count it as an ESA or use tax-free funds to pay for its care.

The animal must be part of your own or a dependent's medical treatment, not anyone else's. It would be like paying for a friend's prescription with your FSA.

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