FSA or HSA funds: 5 things you can’t spend your money on

If you’ve got money in an FSA or HSA account, you might be wondering how you can spend the money. Right?

After all, you’ve saved up your flexible spending account or health savings account tax-free funds a little at a time as a smart way to pay for health and medical expenses.

There’s a long list of health and medical expenses you can use FSA or HSA funds for like:^1,2

• Chiropractic care
• Acupuncture
• Copays
• Deductibles
• Medications with a prescription
• Hearing aids
• And many other things

However, FSA or HSA funds can’t be used for all health-related expenses or medical costs.

In this article, you’ll learn more about:

• Health savings accounts
• Flexible spending accounts
• The top 5 things FSA or HSA funds can’t be used for

What’s a flexible spending account?

It’s a type of account you can set up through an employer to help pay for many out-of-pocket medical expenses.³

And there’s a big benefit to this: You don’t have to pay taxes on the money that goes into your FSA.

Here’s how it works:

• Set up an FSA through your employer
• Decide how much money to put into the FSA every month.
• Spend your FSA funds on allowable expenses like copayments, deductibles, eligible prescription medications, medical devices, and other things.
• Pay for your FSA-eligible expenses using a debit card attached to your FSA account or through an online portal. In some cases, you may pay out of pocket, submit receipts to your employer, and be reimbursed from your FSA fund.
• If there’s money left over in your FSA at the end of the year, there’s a 2.5-month grace period to spend it or you can carry over a maximum of $640 into the following year.³

What’s a health savings account?

If you want to save money on medical expenses, a health savings account is a good way to do that.

Why? You can put money in a health savings account on a pre-tax basis. In other words, it’s a smart way to help lower your out-of-pocket healthcare costs.⁴

Here’s how it works:

• Set up a health savings account with an HSA-eligible health plan.
• Choose a provider. Employers typically offer a HSA option. But you can also set up an HSA with a bank, credit union, or other financial institution with an HSA-eligible health plan.
• Spend your HSA funds on eligible expenses like deductibles, copays, coinsurance, and some dental, medication and vision expenses.
• Pay for your HSA-eligible expenses using a debit card attached to your FSA account or through an online portal. In some cases, you may pay out of pocket, submit receipts to your employer, and be reimbursed from your FSA fund.
• If there’s money left over in your HSA at the end of the year, it rolls over into the following year.
• After you turn 65, if you still have funds in an HSA account, you can use it for anything you want. Taxes may apply.

Top 5 things FSA or HSA funds can’t be used for

Using funds set aside in an FSA or HSA account is a smart way to make your money go a little further and lower your out-of-pocket healthcare costs.

But there are some specific things you can’t spend FSA or HSA funds on.

1. Monthly insurance premiums

Every month you pay your health plan a premium for health insurance. If you’re setting aside tax-free money in an HSA, can you use those funds to pay your premium?

No. There are many eligible health-related medical expenses you can use HSA funds for. However, HSA funds generally may not be used to pay premiums.

Is there an exception? Yes. In some cases, HSA funds can be used to pay:⁵

• COBRA premiums
• Medicare premiums
• Long-term care premiums

2. Future medical care & expenses

You can’t use FSA or HSA funds like a credit card or finance option to pay for surgery or expensive medical care .

Only the funds you’ve contributed to an FSA or HSA account are available.

However, if you anticipate higher-than-normal medical costs for something in the future, you can save more money in your FSA or HSA account.

3. Gym membership fees

Working out is good for your health, right?

So can you use FSA or HSA funds to pay for a gym membership?

In most cases, you can’t. If you’re hitting the gym to get stronger, build muscle, burn calories and feel better, that’s not a qualifying health-related expense, according to the Internal Revenue Service.

However, you may be able to use FSA or HSA funds to pay for a gym membership if your doctor prescribes exercise:⁶

• As part of a physical therapy or rehabilitation plan to treat an injury or musculoskeletal imbalance or weakness
• To treat a chronic health condition like obesity, heart disease or high blood pressure

4. Nutritional supplements

Taking a daily multivitamin? Or maybe you start the day with a green smoothie mixed with a dietary supplement to get more fruits and vegetables in your diet.

Dietary supplements may support your overall health and prevent nutritional deficiencies.

So can you use FSA or HSA funds to pay for them? It depends.⁷

• If you’re taking any kind of supplement because “it sounds like a good idea,” you can’t use FSA or HSA funds to pay for them.
• If a medical professional recommends a vitamin or supplement to treat a diagnosed health condition, you can use FSA or HSA funds to pay for them.

5. Cosmetic procedures

Want a better smile, flatter stomach, a full head of hair, or fewer wrinkles? Teeth whitening and cosmetic procedures can make it happen.

But if you just want to look better, you can’t use FSA or HSA funds to pay for them.

However, if a medical professional recommends cosmetic surgery:⁸

• To prevent or treat an illness
• Fix a deformity caused by genetics, injury from an accident or trauma, or disfiguring disease…

You may use FSA or HSA funds to help pay for the cosmetic procedure, such as reconstructive surgery following breast cancer treatment and removal.

Want to set up an HSA through an eligible health plan?

We can help. Give us a call at (800) 827-9990 to speak to a licensed health insurance agent or find an agent in your area to learn more about eligible plans and HSA options.