Flexible Spending Accounts: Often Forgotten And Misunderstood Eligible And Ineligible Items

Published April 2010

IRS regulations govern the eligibility of reimbursable items and we realize these rules can be confusing at times. As Flex Administrators, BASIC helps ensure that your Flex plan stays within these regulations. This is even more important now that President Obama has increased the budget for fraud and abuse investigations by 50% in 2010. To try to make plan compliance simple, we compiled a list of the most surprising eligible items and also the ineligible items that are most commonly mistaken as eligible.

Often Forgotten Eligible Items

  • Mileage or Mass Transit Expenses To and From Office Visits
    Most participants are surprised that the mileage or transportation costs to visit a doctor or dentist are eligible expenses. The mileage on the plan participant’s car and subway or bus passes to and from the visit are eligible for reimbursement. The mileage rate for medical travel is 16.5 cents per mile after January 1st, 2010.
  • Orthodontia Procedures
    Orthodontia procedures can also be confusing. The best practice for claiming orthodontia expenses is to send in a copy of your paperwork from the orthodontist along with a copy of your contract for quick reference.
  • Over-The-Counter Medication
    As a general rule, over-the-counter medications are eligible expenses. There are some that are not eligible. The rule for over-the-counter items is that it must treat a medical condition. Examples are Tylenol, Sudafed, etc.
  • Chiropractic Services
    Chiropractic services are eligible expenses, though the claim and reimbursement process can be somewhat complicated. Many chiropractic services are prepaid and can only be reimbursed as the services are received rather than when they are prepaid. If you have prepaid for chiropractic services, the reimbursement is equal to a fair value of the service provided on a specific visit to the chiropractor. Make sure you ask for your bill to show the value of the service provided on that visit so you can receive the correct amount of reimbursement. While a massage from the chiropractor is eligible for reimbursement, it requires a letter of medical necessity.

Often Forgotten Eligible Items

  • Toiletries
    Some Flex plan participants are also surprised to find that toiletries such as soap, shampoo, tooth paste, face wash, deodorant, etc are not eligible expenses. Toiletries are the most commonly claimed items that are not eligible for reimbursement under IRS regulations.
  • Dental Procedures
    While almost all procedures performed by a dentist are eligible expenses, teeth bleaching is one of the few that are ineligible.
  • Vitamins
    Vitamins and similar supplements for general health are typically ineligible. For vitamins to be claimed as an eligible expense, a doctor must state in a letter what the patient’s medical condition is and what specific vitamins are used to treat it. The doctor can then prescribe those vitamins which can be claimed as an eligible expense. Multi-vitamins are never available for reimbursement because they only promote general health, they do not treat a specific condition.

Click here for a list of eligible and ineligible expenses.

If you are a client of BASIC Flex, feel free to call a customer service representative at 800-372-3539.

If you’re not a client of BASIC Flex but are interested in learning more about our services, please visit our Flex webpage by clicking here. If you would like to talk to one of our knowledgable sales, please call 800-444-1922 ext. 3 or email sales@basiconline.com.