Health Flexible Spending Arrangement
A Health Flexible Spending Arrangement (FSA) is administered through a special account set up in your name by your employer. You deposit before-tax dollars from your paycheck into your account, and your employer may also contribute. You can then use the money you have set aside to reimburse yourself for qualified medical expenses.
Please refer to IRS Publication 969, Health Savings Accounts and Other Tax-Favored Health Plans for more details.
Qualified Medical Expenses
According to IRS Publication 969, “Qualified medical expenses are those specified in the plan that would generally qualify for the medical and dental expenses deduction. These are explained in IRS Publication 502, Medical and Dental Expenses.”
They may include your deductible, copayments or coinsurance, and certain items not eligible for reimbursement under your medical, dental or vision plan.
Is Massage Therapy Eligible?
The expenses eligible for reimbursement through your Health FSA are generally defined by your FSA administrator (or employer). These can vary signficantly depending on the terms of your plan.
Although IRS Publication 502 does not specifically mention massage therapy, it states the following under the general heading of Therapy: “You can include in medical expenses amounts you pay for therapy received as medical treatment.”
Please be sure to check with your employer about the specifics related to massage therapy under your plan. If massage therapy is included, you will likely be required to provide proof of medical need in the form of a prescription or doctor’s order to obtain reimbursement.
How it Works
Generally, you can elect to contribute a portion of your pay to your Health FSA each year, with before-tax dollars. When you have eligible expenses, you can submit proof of those expenses, and they are reimbursed from your Health FSA with dollars that have never been taxed. So, by setting aside money in the Health FSA, the cost of your health care is reduced.
You save money since you don’t pay taxes on the before-tax contributions to the Health FSA, and you don’t pay taxes on the money you receive in reimbursement. There is helpful documentation availble on the IRS website (IRS Publication 969) that can help anwer questions related to the impact on income taxes.
Throughout the year, you can request reimbursement from your Health FSA for eligible medical, dental and vision care expenses (as defined by your plan and the IRS) that are not paid by your Medical, Dental or Vision Plans. Payment of claims is generally based on the rules set out in applicable regulations, your employer’s plan design, and on the information in the required substantiation documentation.