William Lipovsky
Short Answer — The money in your flexible spending account (FSA) is meant to go toward health care costs. You can use your FSA card to buy a variety of items, but you can’t use it to get cash. It’s also unlikely that you’ll be able to return items you bought using your FSA card for cash. Below, we explain how and where you can use your FSA.
What Is a Flexible Spending Account?
A Flexible Spending Account (FSA) is an employer-based monetary account that’s funded through pre-tax deductions from your paycheck.
FSA accounts are usually offered as part of your employment benefits package, and some employers may also contribute to your FSA.
The account’s sole purpose is to cover out-of-pocket health care expenses. Contributions to your FSA are deducted from your paycheck based on criteria set by your employer.[1]
You can contribute anywhere from $2,850 to $5,000 annually to your FSA, depending on the type of FSA you have. The three kinds of FSA programs include:[2]
- Health Care: This is a standard FSA that covers a wide range of medical expenses. The standard contribution is $2,850.
- Limited Purpose: This is a targeted FSA that only covers specific medical expenses, such as dental care and eye care. The standard contribution is $2,850.
- Dependent Care: This type of FSA is meant to pay for the care of dependents who need specific types of medical care. Dependents in this context are children under the age of 13, a spouse, or a relative with mental or physical disabilities. The standard contribution is $5,000 per household or $2,500 if married and filing separately.
Can You Get Cash From Your FSA?
It isn’t possible to receive cash from your FSA. Regardless of the amount of money you have in your FSA account, it’s not the type of account you can dip into when you need fast cash.
There are strict rules set by the Internal Revenue Service regarding how you can use FSA funds.[3]
While your employer may offer a grace period or allow you to roll over up to $610 in FSA funds for use in the following year, any other money in your account not spent during the calendar year will expire.[1]
Can You Return FSA Items for Cash?
You can return health-related items bought through your FSA account. How you’re refunded is at the discretion of each store.
However, it’s improbable you’ll receive cash back for those returns. Retailers may instead let you choose between a refund directly to your Flex Card or store credit.
Many employers strictly regulate how and whether their employees can return FSA items for refunds.
The University of Iowa, for example, has specific policies forbidding the abuse of FSA funds. Per those policies, mishandling return purchase funds may lead to consequences.[4]
You can check your employer’s FSA policy on returns for more information or speak with a workplace supervisor or human resources manager.
Keep receipts for items purchased with your FSA account because this is documented proof for processing any returns.
Some stores clearly mark FSA receipts to make record-keeping easier. For online purchases, you’ll usually receive a receipt via email after your purchase.
What Happens if You Use Your FSA Card for Non-Approved Purchases?
Stores like Walmart have systems that keep track of FSA-approved products they sell, and non-approved items may be automatically rejected when you try to pay with your FSA card.[5]
This means you’ll have to pay for non-approved items using your own cash, debit, or credit cards at checkout.
However, it’s possible that a store may not flag non-approved purchases properly.
Perhaps you go to the store and purchase a few FSA-approved personal care items and throw in a pack of your favorite gummy bears. Or, perhaps you accidentally take out your FSA card and use it to pay for the pizza, mistaking it for your debit card.
You must report these non-eligible items on your federal tax form and pay a 20% tax penalty for these purchases.[6]
You may have heard people say they purchased eligible items with their FSA money and then sold them for cash, or returned FSA purchases for store credit, and then purchased non-FSA items with the store credit. These and similar activities amount to tax fraud and are not recommended.
What Actions Might Your Employer Take?
Employers don’t take non-qualified expenditures lightly. If you purchase non-medically approved items with your FSA card, your employer has the right to deactivate your FSA card.
The employer may also demand that you repay all the monies for these improper charges back to the employer-run FSA account.[7]
After you make the payment, your employer can reactivate your account. If you fail to repay on your own, your employer can legally take the funds out of your paycheck.
If these measures don’t settle the debt, your employer can take additional legal measures to recover the money.
Considering the high price connected with misusing FSA accounts, it’s much better on your wallet to avoid using your FSA card for anything but approved medical expenses.
What Can You Buy With Your FSA Debit Card (Flex Card)?
Your Flex Card operates like any other debit card, except you can only use it to buy health items.
A wide range of health-related items fall under the Flex Card spending umbrella, including products and services in the following areas:[8]
- Acne treatments: Over-the-counter cleansers, ointments
- Acupuncture treatments
- Allergy/asthma relief: Over-the-counter allergy medications, eye drops
- Baby care: Formula, sunscreen
- Breathing aids: Steam inhalers, vaporizers
- Carpal tunnel relief: Braces and similar devices
- Chiropractic care
- Cold and flu relief: Over-the-counter medications, nasal sprays
- Dental care: Denture cleansers and adhesives, dental guards
- Diabetes treatment: Diabetes test strips, blood sugar monitors
- Digestive health: Stomach acid reducers, nausea soothers, probiotics
- Ear care: Ear drops, ear wax removal systems
- Eye care: Eye drops, contact lens cleaners
- Fertility: Pregnancy tests, ovulation test kits
- First aid: Kits and supplies
- Foot care: Bandages, braces, orthotic inserts
- Incontinence care: Pads and briefs
- Lip care: Cold sore treatments
- Mobility assistance: Canes, walkers, mobility scooters
- Pain management: Compresses, heating pads, therapeutic braces
- Skincare: Sunscreen lotions and creams
- Smoking cessation: Gum, lozenges, patches
- Support braces: Braces that support and stabilize ankles, back, neck, knees, and other areas of the body
Where to Spend Your FSA Funds
Costco
- Eligible products: Items from the pharmacy, optical, and hearing aid centers; see our list of FSA-eligible items at Costco.
- Find a store
CVS
- Eligible products: Over-the-counter medications, home health products, first aid, vitamins, skincare, oral care, contact lenses, and more[9]
- Shop online
- Find a store
FSA Store
- Eligible products: All available items[10]
- Shop online
Target
- Eligible products: First aid, home health care and living aids, medicines and supplements, mobility aids, personal care, sexual wellness, and feminine hygiene[11]
- Shop online
- Find a store
Walgreens
- Eligible products: Children’s health care, skincare, family planning, feeding essentials and baby care, home medical equipment, and incontinence; you can also purchase some prescription items, but you may need to get a list of eligible items from your health care provider.[12]
- Shop online
- Find a store
Walmart
- Eligible products: Diabetic supplies, diagnostics, eye and contact care, and first aid; Walmart offers free home delivery for FSA purchases.[13]
- Shop online
- Find a store
For even more information about using FSA funds, we explain how to use your FSA at Massage Envy.
