Diapers: HSA Eligibility

Diapers/diaper service expenses are usually ineligible, unless used to alleviate the effects of a particular disease or medical condition (e.g., an older child with brain defects [i.e., Aicardi Syndrome]). In addition, adult diapers can be viewed as treatment for incontinence.

Search Term: Diapers FSA

Diapers are not eligible for reimbursement with flexible spending accounts (FSA), health savings accounts (HSA), health reimbursement arrangements (HRA), dependent care flexible spending accounts (DCFSA) or limited care flexible spending accounts (LCFSA). However, in some cases, they are eligible to alleviate the effects of a particular disease or medical condition (e.g., an older child with brain defects [i.e., Aicardi Syndrome]). In addition, adult diapers can be viewed as treatment for incontinence.

Why are diapers not eligible for reimbursement?

Items that are eligible for reimbursement under a consumer-directed healthcare account need to be designed to treat a specific medical condition, so this is a vital regulation when discussing diapers. While diapers have the ability to ward off potential illnesses, infections and other complications, the IRS views them as products that are necessary for "general health" purposes, and therefore ineligible for reimbursement.

As mentioned above, there are some cases where diapers, be they for use by babies, children or adults, are eligible for reimbursement if they are used to treat the symptoms of an underlying medical condition. In these cases, it's best to check with a benefits administrator to explain the full scope of the issue and seek guidance about possible next steps.

If the medical issue has symptoms that require diapers to treat the condition, these items may be eligible for reimbursement with a Letter of Medical Necessity (LMN) from a doctor. These letters must contain a specific diagnosis and details about how the treatment will be used to alleviate the condition. Lastly, the doctor must outline how long this treatment will last and another LMN must be submitted if the treatment exceeds the current plan year.

Eligibility Table

Flexible Spending Account (FSA) Limited Care FSA Dependent Care FSA Health Savings Account (HSA) Health Reimbursement Account (HRA)

Eligible

Eligible with Rx

Eligible with LMN

Not Eligible

Legal Information / Regulations

Information Letter 2009-0209; Private Letter Ruling 8137085

 


AZ-PROD-WEB01 11/19/2017 9:36:44 PM