This month, our featured Ask the Expert question comes from Melissa in South Carolina. Melissa asks:

 

 

There are a few things to consider when talking about 213(d) expenses in relation to Flexible Spending Accounts. Let’s start off with a definition of 213(d) expenses.

 

The Internal Revenue Service (IRS) defines qualified medical care expenses within IRS Section 213(d), which reads:

 

The term “medical care” means amounts paid—

A. For the diagnosis, cure, mitigation, treatment, or prevention of disease, or for the purpose of affecting any structure or function of the body

B. For transportation primarily for and essential to medical care

C. For qualified long-term care services

D. For insurance (including amounts paid as premiums) covering medical care or for any qualified long-term care insurance contract.

 

Section 213(d) was written to define the types of healthcare expenses that could be deducted when filing federal income taxes. As such, it does not line up exactly with eligible expenses under the FSA.

 

While FSAs do cover most 213(d) expenses, they do not cover all of them. Generally, FSA eligible expenses are those related to healthcare for you and your family that are not being reimbursed by another source. These would include things like medical plan deductibles, co-pays and coinsurance, dental expenses, vision expenses and over-the-counter items such as contact lens solution or bandages. Transportation expenses related to medical care are also considered to be eligible under the FSA.

 

Long-term care expenses are not eligible under an FSA, nor are insurance premiums. As FSAs are an employer-sponsored benefit, participants are likely having their insurance premiums deducted from their paychecks on a pre-tax basis. To permit these same premiums to be reimbursed under the FSA would create a “double-dipping” situation, which is not allowed.

 

For more information about the types of expenses that are eligible under the FSA, you can visit Flex’s eligible expense listing here. If you would like to learn more about allowable expense under IRS Section 213(d), you can check out IRS Publication 502.

 

Thanks to Melissa for the question, and keep an eye out for a new featured question next month.

 

Do you have a question about FSAs or other employer-sponsored benefits? Ask the Expert!