That's Eligible?! Can you use an FSA for ride-sharing services?
Owning a car is no longer a given, especially in today's ride-sharing economy. In fact, the number of Americans forgoing car ownership altogether is on the upswing – from 8.9 to 9.1% from 2010 to 2015, U.S. Census data shows.
Ride sharing services are also on the rise – Uber, now available in 600 cities across 65 countries, had 41.8 million users in March 2018 alone, while Lyft had about 23 million users as of January 2018.
So, whether or not you can use your FSA funds to pay for rideshare services like Uber or Lyft is an important concern, especially for millennials and those living in larger cities who don't own a car.
You already know that transportation expenses incurred to receive medical care are eligible for reimbursement with your FSA. Expenses incurred must be primarily for and essential to medical care, and include mileage, rental car, bus, taxi, train, plane and ferry fares, as well as ambulance services. Parking and tolls are also included, as are out-of-pocket expenses like gas, provided you're using your car for medical reasons (and you can't request gas AND mileage for the same trip).
Eligibility doesn't just apply to the person receiving medical care. Parents and guardians, as well as nurses are caregivers are also covered. But this doesn't mean you can claim travel expenses to and from a girls' spa weekend or to pay for a Marie Kondo-inspired getaway – even if it does improve your mental health.
So, when can I ride share with my FSA funds?
In some major urban areas, many people are using public transportation or ride-hailing apps like Uber or Lyft as their primary means of transportation, and that includes medical-related travel.
For example, let's say you live in a major metropolitan area. Your home is within walking distance of your workplace, your grocery store, even your local park and gym. Springing for a monthly subway pass (or even a round-trip ride) just to travel to and from a monthly doctor's visit may not be the most cost-effective option, especially compared to Uber or Lyft.
So can you claim expenses like Uber if it serves as your primary form of transport? Like many questions of FSA eligibility, there isn't a black-and-white answer. It will likely depend on your plan administrator's take on whether an Uber is legally considered a taxi, since according to the IRS, taxi fares are FSA-eligible. In short, Uber can be FSA-eligible, but there's no guarantee.
Worth noting: if you use Lyft or Uber to obtain medical care, you're not the only one. In fact, data from Lyft shows that 29% of the ride-hailing app's users have used Lyft to obtain health care services.
Other travel considerations
When using your FSA funds to pay for medical-related travel expenses, you can't simply swipe your FSA-issued debit card. Instead, you'll have to pay expenses like your Uber ride upfront, then submit receipts for reimbursement later on down the line.
In this case, it pays to be organized. Consider an electronic filing system of all your transportation costs related to medical care.
Apps like Stride can keep track of expenses like mileage and receipts, allowing you to ditch the "receipts-in-a-shoebox" method once and for all. Marie Kondo would be proud.
FSAs are not the same as Transit and Parking Accounts
After all of this, you may be wondering about that account you have to pay for every day transit costs to and from work or for parking, unrelated to your medical care. These are traditionally called Commuter Benefits, and include transit and parking plans that allow you to set aside pre-tax money to pay for qualified expenses. These plans serve a different purpose and are not to be confused with a qualified medical FSA.
Don't waste time hunting for ways to spend your tax-free funds. In That's Eligible?!, we'll bring you these updates every Monday, so you don't have to. And for all things flex spending, be sure to check out the rest of our Learning Center, and follow us on Facebook, Instagram and Twitter.