How to Use Your FSA or HSA Funds for Skin Care and Medical Products with a Letter of Medical Necessity

Flexible Spending Accounts (FSA) and Health Savings Accounts (HSA) are valuable tools that help you manage out-of-pocket health care costs. These accounts let you set aside pre-tax dollars for eligible medical expenses, from prescription medications to select over-the-counter items.

In some cases, you may also be able to use your FSA or HSA funds to purchase skin care products or other health-related items if they are recommended by your health care provider and accompanied by a Letter of Medical Necessity (LMN).

Although FSAs and HSAs serve a similar purpose, which helps you pay for qualified medical expenses with pre-tax funds, there are key differences between the two accounts:

• Eligibility:
• An FSA is typically offered through an employer as part of a benefits package. You cannot open one independently.
• An HSA is available to individuals who are enrolled in a high-deductible health plan (HDHP) and can be opened through an employer or financial institution.
• Ownership and Portability:
• An FSA is owned by your employer. If you leave your job, your unused funds generally do not move with you.
• An HSA is owned by you. The money stays with you even if you change jobs or health plans.
• Rollover Rules:
• FSA funds typically must be used within the plan year, although some employers may allow a small amount to roll over or a short grace period to spend remaining funds.
• HSA funds roll over from year to year without expiration, allowing your balance to grow over time.
• Contribution Limits:
• Both accounts have annual contribution limits that are set by the IRS and can change each year.

Both FSAs and HSAs can be used for a wide variety of eligible expenses, including prescription medications, medical devices, and certain skin care products with a Letter of Medical Necessity.

You may be able to use your FSA or HSA funds for items such as:

• Dermatologist-recommended skin care products, including specific cleansers, moisturizers, or acne treatments used to manage chronic skin conditions such as eczema, rosacea, or severe acne.

• Medical-grade sunscreens prescribed to protect sensitive skin or to manage sun-related disorders.

• Compression garments used for medical conditions like varicose veins or lymphedema.

• Specialty medical devices, such as light therapy tools for psoriasis or percussive therapy guns for chronic pain management.

Always check with your plan administrator to confirm eligibility before making a purchase.

1. Consult your provider: Discuss your symptoms or condition with your health care provider. If a specific product or treatment is recommended, ask whether it qualifies for an LMN.

2. Get the letter in writing: The LMN should include your provider’s name, signature, and a brief explanation of why the product is necessary for your medical condition.

3. Submit documentation: Keep your receipt and the LMN for your records. Some FSA or HSA administrators require you to submit both documents for reimbursement or payment approval.

Using your FSA or HSA funds effectively helps you save money while managing your health needs. A Letter of Medical Necessity ensures that qualified products, particularly those related to chronic skin conditions or ongoing medical care, are covered appropriately.

By understanding what qualifies and maintaining proper documentation, you can make the most of your health spending accounts and focus on what matters most - your well-being.

*Not all products available at Mayo Clinic Store are FSA or HSA eligible, even with a Letter of Medical Necessity (LMN). The Internal Revenue System (IRS) decides which items and expenses can be from an FSA or HSA and are able to modify the list at any time. It is best to always consult with your benefits administator for advice on the eligibility of products. You can also familiarize yourself with the the eligibility requirements from the IRS for medical expenses prior to requesting an LMD from your treating provider. 

Related articles: 

Maximize Your Health Savings for FSA/HSA

Sources: 

Health Care Options, using a flexible spending account FSA. HealthCare.gov. (n.d.). https://www.healthcare.gov/have-job-based-coverage/flexible-spending-accounts/ 

Letter of medical necessity: Definition & examples. MetLife. (n.d.). https://www.metlife.com/stories/benefits/letter-of-medical-necessity/ 

Publication 502 (2024), medical and dental expenses. Internal Revenue Service. (n.d.). https://www.irs.gov/publications/p502