Clearing Up Mysteries About Vitamins & FSA/HSA Eligibility

At first glance, vitamins and supplements seem like natural candidates for FSA and HSA eligibility. They are designed to fill "gaps" in the average diet, and maybe offset minor nutritional deficiencies along the way — yes, even those related to larger health problems.

But the IRS — which governs FSA and HSA eligibility — disagrees, while continuing to cite IRS 213(d), which states all FSA/HSA eligible expenses must conform to the following standard:

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

And this is where the arguments start. Arguments such as...

"My vitamins are necessary! Why am I being punished?"

Vitamins are perhaps the most-glaring example of a product that can either be necessary or "dual-purpose." Daily multivitamins are used to promote better health and well-being, but because there's no specific health need or condition that is helped by using multivitamins, they fall outside the accepted qualifications for FSA and HSA eligibility.

Is there a medical basis for needing a multivitamin? Sure — it's for your health, after all. But promoting general well-being and treating a specific condition are two very different things in the eyes of the IRS.

In the past, we've used toothbrushes and floss as a good comparison point for the vitamin debate, and it still holds up. Though we all know proper dental cleaning is necessary for all-around health and wellness, using a toothbrush and floss has not been identified as having a direct role in treating or solving the specific medical condition.

(Theoretically, patients could use any type of brush, or pay for daily dental cleanings and achieve the same results. Silly? Perhaps, but policy is policy.)

"My vitamins are eligible? How did that happen?"

Though multivitamins are likely the most-popular OTC supplement, only a handful of targeted vitamins have achieved FSA and HSA eligibility, provided the patients have documentation from their doctors claiming the need.

I think we can all agree prenatal vitamins meet the IRS requirements for eligibility, since they have shown to prevent birth defects and boost fetal development in ways that most modern diets can't quite seem to achieve.

Likewise, glucosamine/chondroitin supplements are extremely popular at FSAstore.com and HSAstore.com because of their proven benefits for treating arthritis.

Because the above exceptions have proven value in treating specific needs and conditions, they can be purchased with tax-free health dollars, and without any written approvals from physicians. However…

"Is there any chance they'll make an exception?"

Update 6.1.2021: We have created a home for FSA/HSA advocacy called TaxFreeBetter.com, which lays out the opportunities for FSA/HSA expansion and the types of products and services that American families wish to cover with their tax-free dollars. With sections to look up your member of Congress and issue-specific form letters on areas of FSA/HSA expansion, it's a quick and easy way to lend your support to this important debate.

In early 2021, most vitamins and supplements are still not covered by FSAs and HSAs. But if the past year has taught us anything, changes on the legislative level can happen on a dime and a public push for expansion does not fall on deaf ears on Capitol Hill.

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We obviously can't answer that here. But as many Americans know, working with the IRS is not nearly the nightmare people used to claim. And if a doctor determines your body needs a specific vitamin supplement — even if it falls outside of regular FSA or HSA parameters — then a Letter of Medical Necessity might do the trick.

Chances are, the letter will need to be detailed in explaining why these specific products will benefit you, and how long the expected use will be (such as the duration of specific treatment). It's not a guarantee by any means, but a well-presented case made to your benefits administrator can go a long way toward getting the supplements you need, on a tax-free basis.

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