FSA money can only be spent on specific medical and dependent care costs that the IRS allows, and you must keep receipts to prove what you bought

A Flexible Spending Account (FSA) holds pre-tax dollars your employer sets aside for you, but the money is not yours to spend however you want. The IRS maintains a list of may be able to access expenses — mostly medical, dental, vision, and dependent care costs — and you can only withdraw money to pay for those things. If you spend FSA money on something not on that list, you owe taxes on it plus a 20 percent penalty.

The process is straightforward: you incur an may be able to access expense, you pay for it (usually out of pocket), and then you submit a claim to your FSA plan administrator with a receipt or explanation of benefits. The administrator reimburses you from your FSA balance. Some employers also issue FSA debit cards that work at pharmacies and medical offices, which skips the reimbursement step — you swipe the card and the money comes straight from your account.

Timing matters. FSA money is "use it or lose it" — anything you do not spend by the end of the plan year (usually December 31) is forfeited, though some plans offer a grace period of up to 2.5 months into the next year. You cannot roll unused money into the following year or take it with you if you leave your job.

Key Takeaways

  • FSA money covers IRS-approved medical, dental, vision, and dependent care expenses only; spending it on anything else triggers taxes and a 20 percent penalty.
  • You typically pay out of pocket and submit a receipt to your plan administrator for reimbursement, or you use an FSA debit card at participating providers.
  • Unused FSA money at the end of the plan year is forfeited unless your plan offers a grace period, so tracking your balance throughout the year prevents waste.
  • Receipts and proof of payment are required for every claim; your plan administrator may ask for an explanation of benefits from your provider if the receipt is unclear.

Medical expenses you can pay with FSA money

The broadest category of FSA-may be able to access expenses is medical care. This includes doctor visits, hospital stays, surgery, lab tests, X-rays, and prescription medications. You can use FSA money to pay your deductible, copayments, and coinsurance — essentially any out-of-pocket cost your health insurance does not cover.

Some less obvious medical expenses also may have access to. Insulin and other diabetes supplies, blood pressure monitors, thermometers, crutches, wheelchairs, and hearing aids are all may be able to access. Mental health counseling and therapy sessions count. Acupuncture, chiropractic care, and physical therapy are covered if a doctor prescribes them. Over-the-counter medications like pain relievers and allergy medicine are may be able to access only if you have a prescription from your doctor — buying them without a prescription does not may have access to.

Preventive care covered by your insurance at no cost to you (like annual checkups or screenings) cannot be paid with FSA money because you have no out-of-pocket expense. However, if your plan requires you to pay something toward preventive care, that amount is may be able to access.

Dental and vision expenses covered by FSA

Dental work is one of the most common FSA uses. Cleanings, fillings, root canals, crowns, extractions, and orthodontia (braces) all may have access to. You can use FSA money for dentures, bridges, and implants. Teeth whitening and cosmetic dental work do not may have access to unless they are medically necessary — for example, a crown needed after an accident is may be able to access, but cosmetic veneers are not.

Vision expenses include eye exams, glasses, contact lenses, and contact lens solution. Laser eye surgery (LASIK) is may be able to access. Sunglasses are not, even if they have a prescription, because they are considered general-use eyewear rather than medical devices.

If your dental or vision insurance covers part of the cost, you can use FSA money only for the amount you pay out of pocket after insurance pays its share.

Dependent care expenses and FSA money

Some FSAs are set up as dual-purpose accounts that cover both medical expenses and dependent care. If your plan includes a dependent care component, you can use that portion to pay for childcare, adult day care, or elder care — but only if the care allows you or your spouse to work or look for work.

may be able to access dependent care includes daycare centers, in-home babysitters, preschool, and after-school programs. Summer day camps that provide childcare while you work are covered. Overnight camps, kindergarten (which is typically considered education rather than care), and school tuition are not may be able to access, even if they free up your time to work.

You can use dependent care FSA money only for dependents you claim on your tax return, and the care provider must be someone other than your spouse or a dependent you claim. The IRS limits dependent care FSA contributions to $5,000 per year for married couples filing jointly and $2,500 for single filers, though your employer may set a lower limit.

How to submit a claim and get reimbursed

If you have an FSA debit card, you can use it directly at pharmacies, doctors' offices, and other providers that accept it. The card is linked to your FSA balance and deducts the cost automatically. You do not need to submit a separate claim, though you should keep your receipt in case your plan administrator asks for proof later.

If you do not have a debit card or you are paying a provider that does not accept it, you pay out of pocket and then submit a claim. Log into your plan administrator's website or mobile app, upload a photo of your receipt or explanation of benefits, and request reimbursement. Most administrators process claims within one to two weeks. Some plans also let you mail in paper claims or call a customer service number to submit claims by phone.

Your receipt must show the date of service, the provider's name, what was purchased or treated, and the amount you paid. An explanation of benefits from your insurance company works if your receipt does not have all this information. If your receipt is unclear or incomplete, your plan administrator will ask you for more details before approving the claim.

Keeping track of your FSA balance and year-end important date

Your plan administrator sends you a summary of your FSA balance, usually quarterly or whenever you request it. Check this regularly so you know how much money you have left to spend. Many administrators offer a mobile app or online portal where you can see your balance in real time.

The plan year typically runs January 1 through December 31. Any money still in your account on December 31 is forfeited — you cannot carry it over to the next year. Some employers offer a grace period of up to 2.5 months (usually through March 15 of the following year) to spend remaining money, but this is optional and not all plans include it. Check your plan documents or ask your benefits administrator whether your plan has a grace period.

If you leave your job during the year, you generally lose access to your FSA money when ready, even if you have not spent it all. Some employers allow you to continue using your FSA through COBRA, but you would have to pay the full premium yourself. Check with your employer's benefits department about what happens to your FSA if you separate from the company.

Expenses that do not may have access to for FSA money

General wellness products and services are not may be able to access. Gym memberships, fitness classes, and sports equipment do not may have access to, even if they improve your health. Vitamins and supplements are not covered unless prescribed by a doctor for a specific medical condition. Cosmetic procedures like Botox, facelifts, and hair removal are not may be able to access.

Toiletries and general hygiene products — toothpaste, shampoo, soap, deodorant — do not may have access to. However, specialized products prescribed by a doctor, like medicated shampoo for a scalp condition, may be may be able to access if you have a prescription.

Travel to receive medical care, lodging while undergoing treatment, and meals are generally not may be able to access. Maternity clothes, baby formula, diapers, and other baby care products do not may have access to. Pet medical expenses are not covered, even if the pet is a service animal (service animal training and equipment may be may be able to access in some cases, but veterinary care is not).

Frequently Asked Questions

Can I use FSA money to pay my health insurance premiums?

No. You cannot use FSA money to pay your regular health insurance premiums. However, you can use it to pay out-of-pocket costs like deductibles, copayments, and coinsurance once you have already paid the premium. If you are on COBRA, you cannot use FSA money for COBRA premiums either.

What happens if I submit a claim for something that is not may be able to access?

Your plan administrator will deny the claim and the money stays in your FSA account. If you have already paid out of pocket, you do not get reimbursed. If you used an FSA debit card for an ineligible expense, the transaction may be reversed or you may be asked to repay the amount. Intentionally submitting false claims can result in plan disqualification.

Can I use my spouse's FSA money if I do not have one?

No. FSA money belongs to the person whose name is on the account and who is enrolled in the plan. Your spouse cannot access your FSA, and you cannot access theirs. If you are both employed and both have FSAs, you each manage your own account separately.

Do I need to keep receipts forever?

Your plan administrator typically has the right to audit claims for three to five years after you submit them. Keep receipts and explanations of benefits for at least that long, either in paper or digital form. After that period, you can discard them.

What if I have leftover FSA money and my plan does not have a grace period?

Money forfeited at the end of the plan year cannot be recovered or rolled into the next year. To avoid losing money, estimate your may be able to access expenses carefully when you choose your FSA contribution amount each year. If you realize mid-year that you will not spend all your money, you can sometimes change your contribution for the following year during open enrollment.