Common Eligibility Mistakes to Avoid
Assuming every online listing is eligible can lead to reimbursement headaches. Here is what to watch for.
Nothing is more frustrating than purchasing a product you thought was HSA/FSA eligible, only to have your reimbursement denied. Unfortunately, this happens more often than you'd think. Let's look at the most common mistakes and how to avoid them.
Mistake #1: Trusting Every "HSA Eligible" Label
Just because a product is marketed as "HSA eligible" doesn't guarantee your specific plan will cover it. Eligibility can vary based on your plan administrator's interpretation of IRS guidelines.
Always verify with your plan administrator before making large purchases. Keep all receipts and product descriptions.
Mistake #2: Forgetting Documentation
The IRS requires substantiation for all HSA/FSA expenses. This means you need to keep detailed records including receipts, prescriptions (if required), and proof of medical necessity.
- Itemized receipts showing date, vendor, and item description
- Prescription or letter of medical necessity (for certain items)
- Explanation of Benefits (EOB) from your insurance
- Credit card statements as backup (but not as primary proof)
Mistake #3: Missing Prescription Requirements
Many items that seem like obvious medical expenses actually require a prescription or Letter of Medical Necessity (LMN) to be eligible. This includes items like massage guns, weighted blankets, and certain supplements.
Items requiring a prescription: Sunscreen, vitamins/supplements, massage devices for general wellness, exercise equipment (even if marketed as "therapeutic").
Mistake #4: Using Funds for Ineligible Expenses
Using HSA/FSA funds for non-qualified expenses triggers taxes and penalties. For HSAs, you'll owe income tax plus a 20% penalty if you're under 65. For FSAs, the purchase simply won't be reimbursed.
- General fitness equipment (treadmills, weights) without a prescription
- Cosmetic procedures and products
- Toiletries and personal care items
- Gym memberships (with very rare exceptions)
- Teeth whitening products
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