Items marked FSA eligible sometime aren’t. It’s truly “buyer beware”

In 2026, the IRS explicitly warned consumers about misleading “FSA Eligible” labels, particularly from companies claiming that general wellness items like meal plans or gym memberships can be converted into medical expenses through “letters of medical necessity” obtained via online questionnaires.

 

Retailer “FSA eligible” badges are not a legal guarantee of reimbursement. Eligibility is strictly governed by IRS Section 213(d) and the terms of your plan. Remember the IRS defines eligibility as alleviating illness, not just general health, requiring careful checks before using your card.

 

Protect Yourself Steps to Verify Eligibility

1. Check Your Plan: Review your specific plan’s details
2. Use Plan Portals: The most reliable way to check eligibility is through your specific employer’s plan portal or FSAFEDS.
3. Scan with Apps: Use mobile App to scan product barcodes for real-time eligibility checks.
4. Look for Official Tags: Use retailers with designated FSA/HSA sections (like Amazon, Target, Walmart, CVS) that often filter for genuinely eligible items.
5. Confirm Medical Necessity: If an item is “fuzzy,” you may need a Letter of Medical Necessity (LMN) from a healthcare provider. LMN ABUSE – The IRS now emphasizes that these must result from face-to-face or legitimate telehealth interactions, not just online forms.  Advantage Administrators provides an acceptable form.

If You Purchase an Ineligible Item, Don’t Panic!

If your FSA card is used for an ineligible item, your plan administrator may ask you to replace the funds or treat the amount as taxable income. Always save detailed, itemized statements; credit card receipts alone are insufficient for IRS verification.

 

The information in this blog post is for educational purposes only. It is not investment, legal or tax advice. For legal or tax advice, you should consult your own counsel. To stay up to date on benefits trends and insights, subscribe to our blog.