IRS Qualified Expenses: FSA and HSA Eligibility

Short answer

Qualified medical expenses are "the costs of diagnosis, cure, mitigation, treatment, or prevention of disease." That includes doctor visits, prescriptions, dental and vision care, medical equipment, and many over-the-counter products. Some expenses are reimbursable outright. Others require a letter of medical necessity from a licensed clinician. A third category, such as cosmetic work and general wellness with no diagnosed condition, is not reimbursable.

The IRS standard applies to all three account types. The key difference is how money rolls over. FSA accounts follow a "use-it-or-lose-it" rule, though some plans allow a limited carryover. HSA and HRA accounts carry unused balances forward differently. All three file claims the same way: Burst requests a letter where needed, files the claim with your administrator, and the administrator pays you out of your account.

What FSA, HSA and HRA accounts cover

All three account types reimburse the same IRS-defined qualified medical expenses. The IRS definition is broad.

Medical expenses are "the costs of diagnosis, cure, mitigation, treatment, or prevention of disease." That includes doctor and hospital visits, prescriptions, mental health therapy, dental and vision care, medical equipment, and many items you can buy without a doctor.

Expenses must not be covered by insurance already. Any item can be reimbursable, reimbursable-with-a-letter, or not reimbursable depending on how you use it and your situation.

The medical-expense standard means the IRS does not reimburse general wellness bought for someone with no condition. It does not reimburse cosmetic work. It does not reimburse food, clothing, or toiletries. But it does reimburse a gym membership if a clinician ties it to a diagnosed condition, a supplement if a clinician names the medical purpose, and a fitness device if it treats a specific health issue. The plan document and the administrator's review of your claim have the final say for FSA and HRA accounts. For HSA accounts, the IRS rules apply the same way across all plans.

How to read the categories below

Every item falls into one of three categories. Knowing which one tells you what to do before you buy.

Reimbursable outright

These are qualified medical expenses under IRS Publication 502 and need no letter. Examples: doctor visits, prescription drugs, hearing aids, eyeglasses, dental work, and many over-the-counter medicines. You are reimbursable as long as your insurance did not pay for it already.

Reimbursable with a letter

These items need a letter of medical necessity from a licensed clinician. The clinician confirms a diagnosed condition and explains in one sentence how the item treats it. If the honest explanation is general wellness, appearance, convenience, or energy with no medical condition, the answer is not reimbursable. The letter has to be dated on or before the purchase date, so request it before you buy.

Not reimbursable

These fall outside the IRS medical-expense definition. They are cosmetic, general wellness, or unrelated to healthcare. No letter changes this outcome.

What changes by plan

The IRS sets the baseline for what is a qualified medical expense. The plan document and the administrator control the specifics for FSA and HRA accounts. Two employers can cover the same medical expense differently based on what their plan allows. For HSA accounts, the IRS rules govern directly without an employer plan document in between.

Example one: A gym membership. The IRS says "You can't include in medical expenses health club dues or amounts paid to improve one's general health." But a clinician-certified gym membership can be reimbursable with a letter for diagnosed conditions like diabetes or back pain. Some employers' FSA plans limit wellness expenses beyond what the IRS allows. Others approve them. Burst files the claim with a letter. The plan document and administrator decide.

Example two: A topical cream. Over-the-counter pain-relief creams are reimbursable outright under Publication 502, with no prescription and no letter. But some employers' FSA plans limit out-of-pocket drug reimbursements to prescription items only. Burst files the claim. The plan document and administrator decide.

OTC and pharmacy

The CARES Act of 2020 restored over-the-counter drugs and medicines to full reimbursability. You do not need a prescription for pain relievers, allergy medicine, cold medicine, antacids, sleep aids, or topical creams. Insulin has always been reimbursable. Nutritional supplements (vitamins, protein, probiotics, creatine, collagen) are reimbursable with a letter when a medical practitioner recommends them as treatment for a specific condition and provides a letter explaining that condition.

Personal care and hygiene

Sunscreen and menstrual products became reimbursable under the CARES Act of 2020. General personal care items (deodorant, shampoo, soap) are not reimbursable because they are not medical expenses.

Diapers are reimbursable only if medically necessary.

The cost of a toothbrush and toothpaste is a nondeductible personal expense. An electric toothbrush can be reimbursable with a letter for a diagnosed gum condition like gingivitis.

Vision and dental

Vision and dental care are reimbursable outright under IRS Publication 502. The IRS allows reimbursement "for the prevention and alleviation of dental disease." Eye exams, prescription eyewear, and corrective surgery are all medical expenses. Contact lens solution for medical vision correction is reimbursable. Reading glasses for vision correction are reimbursable. Cosmetic vision procedures (such as purely cosmetic LASIK not medically necessary) fall under cosmetic rules and are not reimbursable.

Medical devices and equipment

Medical devices and diagnostic equipment are reimbursable outright. The IRS includes "hearing aid and batteries, repairs, and maintenance needed to operate it" as an explicit example. Blood pressure monitors, glucose meters, pulse oximeters, thermometers, CPAP equipment, nebulizers, and mobility aids all qualify as medical equipment. The device must be primarily medical in purpose, not a general wellness or fitness tracker.

Fitness and wellness

All of these items are reimbursable with a letter when a clinician ties them to a diagnosed condition.

You can't include in medical expenses health club dues or amounts paid to improve one's general health. But a clinician-tied gym membership treats a specific condition, making it reimbursable.

A gym membership, fitness class, trainer, massage, or wellness device becomes reimbursable when a clinician names a condition it treats. Examples include Type 2 diabetes, arthritis, back pain, anxiety, and insomnia. Request your letter before you buy.

Medical services and professional care

Professional medical care is reimbursable outright. Medical expenses are "the costs of diagnosis, cure, mitigation, treatment, or prevention of disease." Doctor visits, hospital care, therapy (physical, mental health, occupational), acupuncture, chiropractic, lab tests, and vaccines all meet this standard. A weight-loss program can be reimbursable with a letter if a clinician certifies it as treatment for a diagnosed condition like obesity. The food and meal replacements themselves are not reimbursable.

Family and dependent care

Medical expenses for your spouse and dependents are reimbursable from FSA, HSA and HRA accounts under the same rules as your own expenses. The same three categories apply: reimbursable outright, reimbursable with a letter, and not reimbursable. A child's medical expenses, dental work, vision care, and prescriptions are all reimbursable if the parent or guardian is the account holder.

Note: Dependent care FSA is a separate account type for childcare and elder care expenses, not medical care. It has no connection to letters of medical necessity and different rules apply. Medical expenses for your dependents use the same health FSA, HSA or HRA account as your own.

How reimbursement works

When you buy a qualified medical expense, Burst files the reimbursement claim with your FSA, HSA or HRA administrator. For items reimbursable with a letter, Burst requests the letter from a licensed clinician first. The administrator reviews the claim and decides whether to approve it based on the IRS rules and your plan document. If approved, the administrator pays you out of your account by deposit or check. If denied, Burst writes the appeal on your behalf.

The timing matters for items that need a letter. The letter has to be dated on or before the purchase date. So request your letter before you buy, or make sure your letter date covers the purchase. For reimbursable-outright items, you can request reimbursement after you buy, but having a letter in advance streamlines the process. No letter, no charge. If the claim is denied, money back.

Getting it reimbursed with Burst

Here's the practical route. Request a letter of medical necessity from Burst ($35 once, about two minutes). A licensed clinician reviews it and it's typically in your inbox within 24 hours. Burst files the reimbursement claim with your FSA, HSA or HRA administrator, who pays you out of your account by deposit or check. If there's no letter there's no charge, and a denied claim means your money back. The letter has to be dated on or before the purchase it covers, so do this step first.

Request my letter for $35

Frequently asked questions

What is an IRS qualified medical expense?

Medical expenses are "the costs of diagnosis, cure, mitigation, treatment, or prevention of disease." That includes doctor visits, prescriptions, dental and vision care, medical equipment, and items that treat a diagnosed health condition.

Do I need a prescription for over-the-counter medicine?

No. The CARES Act of 2020 made over-the-counter medicines like pain relievers, allergy medicine, cold medicine, antacids, and sleep aids reimbursable outright, without a prescription or letter.

Can I use my FSA for a gym membership?

Yes, with a letter of medical necessity from a clinician. Request your letter when a clinician names a diagnosed condition it treats, such as diabetes, arthritis, or back pain.

Are supplements and vitamins reimbursable?

Yes, with a letter. Request your letter when a medical practitioner recommends them as treatment for a specific diagnosed condition.

What is not reimbursable?

Cosmetic procedures (Botox, fillers, laser hair removal), general wellness items without a condition, food and clothing, general toiletries (deodorant, shampoo), and weight-loss food are not reimbursable under any circumstance.

Does the plan document override the IRS rules?

For FSA and HRA accounts, yes, the plan document governs specifics like which items are covered and carryover rules. For HSA accounts, the IRS rules apply directly. In all cases, Burst files the claim. The administrator decides based on the rules that apply.

Keep reading: Complete List of FSA Eligible Items, Complete List of HSA Eligible Items, What Can I Use My FSA Funds On?, What Can I Use My HSA Funds On?, and all guides on this topic.

Sources

• IRS Publication 502 - Medical and Dental Expenses (qualified medical expense definition, item rulings for OTC drugs, cosmetic surgery, supplements, weight-loss programs, health club dues, diapers, toothbrushes, hearing aids, eyeglasses, dental treatment, capital improvements)

• IRS Publication 969 - Health Savings Accounts and Other Tax-Favored Health Plans (FSA account definition and annual spending rules, FSA carryover and grace period, HRA employer-funding and account governance, HSA account definition, HSA balance treatment)