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Qualified FSA Expenses

Explore items that can be reimbursed by your FSA Qualified Medical and Dependent Care Expenses.

Guidelines for Submitting Orthodontia Claims to BASIC NEO for Reimbursement.

The Qualified Medical and Dependent Care Expenses list is not comprehensive. It is merely a summary of typical expenses allowed under a Medical and Dependent Care Reimbursement Account. Internal Revenue Code 105 and 213 defines expenses eligible for reimbursement.

IRS Publications

For more information about what types of expenses qualify for reimbursement, see IRS Publication 502. However, use Publication 502 with caution as this document is written solely to help taxpayers determine what medical expenses can be deducted on their tax return. There are several fundamental differences between what is allowed as a tax deduction in Publication 502 and the rules that apply to health FSAs. Section 125 regulations governing Health FSAs control. Expenses can only be reimbursed under a health FSA based on the year in which they are incurred while expenses are deductible by a taxpayer for the year in which they are paid. OTC drugs are not deductible under Code 213(a), but they are reimbursable by a health FSA if they qualify as medical care under Code 213(d). Insurance premiums and certain long-term care expenses are not reimbursable by a health FSA, but they may be deductible (assuming that the 7.5% threshold and other requirements are met). For more information, see IRS publication 502.

Qualified expenses are for the day care of a dependent to enable you (and your spouse if married) to be gainfully employed. For married participants, their spouse must be employed, be a full-time student or disabled at the time the dependent care expenses were incurred. Expenses paid through a flex plan cannot be included in computing the child care credit on the employees tax return. In many cases the tax savings are much better using the flex plan, but in some limited situations, employees may want to take the credit on their tax return. Employees should consult their tax advisor for guidance. Up to $5,000/year can be paid through your Dependent Care FSA. For more information, see IRS Publication 503.