Eligibility

Flex-Ed: Shedding light on the letter of medical necessity

Every year, as we approach open enrollment (and it's we receive a lot of the same questions. And discussing the letter of medical necessity (LMN) is always at the top of the list. So, since this a column about the basics of flexible spending account use, we're happy to cover it again. Because it's 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 a classification of qualifying medical products and services as "requiring a letter of medical necessity."

In short, an LMN is like a doctor's note. Having an LMN can help any product or service that falls outside the IRS's definition of "medical care" (but can assist the treatment of a condition) get approved for FSA reimbursement.

Defining "medical care"

For a product or service to be FSA-eligible, it must treat, cure, diagnose or prevent a disease or illness. Or it has to affect a function of the body. So a product like a first-aid kit is a no-brainer, as it can be used in a huge variety of medical situations.

However, there are many treatment methods and products available that fall outside IRS guidelines that could be made eligible with some additional documentation from your doctor.

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.

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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New to FSAs? Need a refresher course in all things flex spending? Our weekly Flex-Ed column gives you a weekly dose of FSA Living 101, offering tips for making the most of your tax-free funds. Look for it every Thursday, exclusively on the FSAstore.com Learning Center.

Eligibility

If my Chiropractor writes a Rx for a mattress, can I be reimbursed with FSA?

A mattress is not eligible for FSA reimbursement unless it is used to treat/prevent a medical condition. However, if a claim is submitted with a Letter of Medical Necessity (LMN) from a chiropractor, it would be eligible for reimbursement through an FSA as it is used to treat a legitimate medical issue.

Accounts

HSAs & FSAs: When shopping is the best medicine

One of the easiest ways to stay competitive in the hiring world is offering amazing benefits for your employees. But with the high cost of health care and lack of knowledge of your plan options, you might find this low on your priority list.

If you haven't explored the consumer driven health care (CDH) trend, now is your time. What started as an industry buzz word has become a budget-friendly benefit offering you can't ignore.

Health savings accounts (HSAs) and flexible spending accounts (FSAs) are two elements that make up part of CDH. Both pre-tax benefits function similarly but do have distinct differences on factors like contribution limits, fund availability and rollover limits.

But don't worry – we've broken it all down for you.

PrimePay teamed up with the FSA Store to take you on a shopping trip that can actually save you money. View the infographic below for details on eligibility, deadlines and more.

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