Medical Review by Alyssa Frey, FNP-C
HSA/FSA and your health spending budget—quick answers:
- Health Savings Accounts (HSAs) and Flexible Spending Accounts (FSAs) are tax-advantaged accounts. With these accounts, deposited funds are not counted as taxable income. By saving on taxes, you keep more of your hard-earned cash.
- Items used solely for medical care automatically qualify as medical expenses. Those that can be used for general wellness may qualify. But they need to help you treat, manage, or prevent a medical condition.
- To qualify fitness, nutrition, and similar costs as eligible expenses, you need a Letter of Medical Necessity (LMN). In this short document, a clinician explains how the item or service supports your condition.
- With Lemonaid Health, you can get a Letter of Medical Necessity online. Answer a brief questionnaire, and a clinician will review your information. If you qualify, they’ll write your letter. We’ll add it to your patient portal and email you a link.
On paper, using your Health Savings Account (HSA) or Flexible Spending Account (FSA) can be hard to understand.
Here, we’ll dig into the basics of how to use HSA/FSA funds for eligible expenses. Then, we’ll explain when you can use these funds for less common costs. And we’ll make sure you know how to get the Letter of Medical Necessity (LMN) you need to qualify certain expenses.
What is a Health Savings Account (HSA)?
An HSA is a tax-advantaged savings account that certain insured individuals can open for themselves. You can open an HSA if you have a high deductible health plan (HDHP). You can get this plan through your job. Or you can purchase it yourself from the Health Insurance Marketplace. If your plan qualifies, you can open an HSA at any bank or credit union that offers the account.
The IRS determines HSA eligibility—and the amounts often change yearly.
Here are the current HSA eligibility requirements:
- In 2026, individual plans qualify if:
- They have a deductible of at least $1,700
- Their out-of-pocket maximum is below $8,500
- In 2027, individual plans qualify if:
- They have a deductible of at least $1,750
- Their out-of-pocket maximum is below $8,700.
- In 2026, family plans qualify if:
- They have a deductible of at least $3,400.
- The out-of-pocket maximum is below $17,000
- In 2027, family plans qualify if:
- They have a deductible of at least $3,500
- The out-of-pocket maximum is below $17,400
What is a Flexible Spending Account (FSA)?
An FSA is a tax-advantaged account that employers offering health insurance can include as a benefit. If your workplace has an FSA, your employer can deposit some of your pay into the account.
What happens if you have an HSA and are then offered an FSA? You can only take part in a Limited Purpose FSA. With this type of FSA, you reserve funds only for dental and eye care expenses. You’ll have to use HSA funds for other medical costs. (If your workplace plan is an HDHP, you can still contribute.)
Common HSA/FSA terms to know
Ownership
Individuals who open an HSA own the account. A primarily insured family member can open and own one for use by all family members. With FSAs, employers own the account. Employees are additional “account holders.”
Contribution limits
The IRS determines the most you can deposit (or contribute) to your HSA/FSA within one year. This amount often changes, so make sure to confirm it yearly with the IRS or your plan administrator.
HSA contribution limits:
- In 2026, individuals can deposit up to $4,400 and families up to $8,750.
- In 2027, those amounts rise to $4,500 and $9,000.
- At age 55, individuals can deposit an additional $1,000 per year.
FSA contribution limits:
- In 2026, the IRS sets the individual contribution limit at $3,400.
- Employers can choose to set lower limits.
- To encourage you to take care of your health, they may also “match” the amount you contribute!
Rollover funds
This refers to whether unused funds stay in the account from one year into the next.
Because individuals own their HSA, you keep all unused funds. You can use the funds whenever you need them. Or you can let the balance grow. With some HSAs, you can earn interest on banked funds.
FSAs have a “use it or lose it” rule. If you don’t use the funds within the year, you can lose them entirely. But employers can choose to offer one of two options. They can roll over a certain amount to the next year. (The IRS maximum rollover amount from 2026 to 2027 is $680.) Or they can give you until March 15 of the next year to use your remaining funds.
They don’t have to offer either of these options. And it’s important to note that you’ll probably forfeit your FSA funds if you change jobs. You may have time to use the funds before you leave. But you can’t transfer those funds to a new FSA.
Eligible expenses
When it comes to FSA- and HSA-eligible expenses, there are two kinds of medical costs.
- Automatically qualified medical expenses: These include items and services that are only used for medical purposes. Doctor visit fees, prescription drugs, cold medicines, eyeglasses, COVID tests, and other similar products automatically qualify.
- Expenses that require additional documentation: These include things some people use for medical expenses and others for general wellness. For example, exercise benefits almost everyone. But if it relieves pain from a chronic condition or helps someone with obesity lose weight, the cost can qualify as a medical expense. More on this below!
Payments and reimbursements
- Direct payments: With both accounts, your account administrator can give you a dedicated HSA/FSA card. Think of it like a debit card: it contains only the amount saved in your account. You can use the card to pay for automatically qualifying expenses like medications and doctor copays. Some businesses, like supplement companies and gyms, may allow you to use the card at checkout.
- Reimbursements: When you can’t use your card, you can reimburse yourself from your HSA/FSA funds. How that happens depends on your account administrator. You may have to submit receipts with additional documentation. Or you may be able to transfer the amount yourself.
Notable differences between an HSA and FSA
As we said above, the main differences between HSAs and FSAs are ownership and rollover limits. But here are more ways they differ.
- Ownership: Individuals own HSAs. Employers own FSAs.
- Rollover funds: You keep all deposited, unused HSA funds. Employers can choose if and how you can use unused FSA funds.
- Tax filing: If you have an HSA, your account administrator may send you Form 1099-SA, which reports HSA distributions. They may also send Form 5498-SA, which reports contributions. You’ll use those to fill in and file Form 8889. With an FSA, your contributions usually appear on your W-2 form. So you don’t typically have to file additional forms.
Eligible medical expenses—which ones automatically qualify?
Most items used only for medical purposes automatically qualify as HSA-eligible and FSA-eligible expenses. That means you can pay for them with your HSA or FSA card. Or you can reimburse the purchase amount from your HSA/FSA.
Common HSA/FSA items include:
- Prescription medications
- Over-the-counter drugs
- Medical devices (like blood glucose tests for diabetics)
- Blood tests
- Copays for doctor and dentist visits
- Mobility devices (crutches, walkers, rollators, wheelchairs)
- Assistive technology devices (like hearing aids and screen readers)
- Eye exams, eye surgeries, eyeglasses, and contact lenses
- Lactation expenses (breast pumps, breast milk storage)
- Sunscreens (must be broad spectrum and at least SPF15)
- Therapy sessions (psychology, psychiatry, etc.)
- Birth control (condoms, diaphragms, medications)
- Pregnancy tests
- Acupuncture sessions
- Chiropractic care
- Addiction services (inpatient care, transportation to AA, etc.)
- Stop-smoking products
- Guide dogs or other service animals
This is a short list of eligible items. Some include restrictions. To make sure you’re using your HSA/FSA funds correctly, review the item in the IRS documentation.
Other expenses that may qualify as HSA/FSA-eligible expenses
It can be hard to know when to use HSA funds or FSA funds. That’s because items used for general wellness may qualify. But they’re not automatically considered medical expenses.
For example, an air purifier may qualify as a medical expense for people with asthma, allergies, or COPD. Otherwise, the cleaner air just benefits general health and wellness.
Other items that may qualify for HSA/FSA use include:
- Gym memberships, fitness classes, and personal training fees. If exercise helps you manage a condition, it may qualify as a treatment. Conditions include arthritis, fibromyalgia, cancer, back pain, migraines, sleep disorders, asthma, and many more.
- Nutrition coaching: Some insurance plans cover dietitian costs. If you have a condition like obesity, diabetes, ulcerative colitis, Crohn’s disease, or others, the cost may qualify for HSA/FSA.
- Weight loss programs. If you have obesity, hypertension, or heart disease, weight loss costs are a medical expense. If you want to lose weight for appearance or general well-being, it’s not.
Even if you have a qualifying condition, you can’t just use your HSA/FSA to pay the cost. First, you need documentation qualifying this cost as medically necessary. This document is called a Letter of Medical Necessity, or LMN.
What is a Letter of Medical Necessity (LMN)?
A Letter of Medical Necessity (LMN) details why your clinician recommends a product for your condition. Under IRS rules, this can make a related purchase qualify as a medical expense.
In the letter, your clinician will explain why the item helps you treat or alleviate symptoms of your condition. Or they may recommend the item to prevent a condition you’re at high risk for. If necessary, they’ll provide proof that the item supports the condition.
With Lemonaid Health, you can get a Letter of Medical Necessity online.
With the letter, you can most likely use your HSA/FSA to pay for the treatment or item. But you’ll want to confirm eligibility with your HSA/FSA administrator.
Sometimes, your administrator will request this letter before they’ll reimburse the cost. Even if they don’t, you’ll want to save it. Without the letter, you won’t have proof you’ve used your HSA/FSA properly. If you get audited, you may be penalized for those funds.
When do you need a Letter of Medical Necessity?
You do not need an LMN to pay for doctor copays, prescriptions, and similar medical products. You need an LMN if your intended purchase is not automatically FSA- or HSA-eligible. For example, if fitness, nutrition, or massage therapy supports your condition, you’ll need an LMN.
How to get a Letter of Medical Necessity online
Fortunately, you don’t need to make an in-person appointment with your doctor to get an LMN. With Lemonaid Health, you can jump online and connect with a clinician. If you qualify, they’ll write everything you need in your Letter of Medical Necessity.
How to get your LMN with Lemonaid
- Take an online consultation. Answer a brief health questionnaire about your condition. Currently, we can help patients get an LMN for fitness fees, weight loss programs, and nutrition costs.
- Pay a $25 membership fee. This covers your consultation, clinician review, and your LMN (if you qualify).
- Wait for clinician review. This usually takes only one business day! If you qualify, your clinician will write your LMN.
- Follow the link to your letter. We’ll email you a secure link to your letter, which is stored in your patient dashboard.
How to use your LMN from Lemonaid
- Make your purchase. Most vendors don’t accept HSA/FSA cards for fitness or nutrition purchases. So you’ll most likely have to pay with your credit or debit card.
- Upload your LMN and receipts. Log in to your HSA/FSA account. Find the claims, reimbursements, or documents section. Upload your LMN and purchase receipts. If needed, submit the request to the HR person who handles your company’s FSA.
- Wait for reimbursement. Sometimes, the amount will automatically transfer from your HSA/FSA into your chosen account. Other times, your HSA/FSA administrator needs to review your LMN and receipts. It may take a few days for them to review and transfer funds.
- File your letter. The IRS suggests keeping records for at least 3 years after you’ve filed your taxes. Keep your LMN for at least this long. That way, you’ll have proof you’ve used your funds properly if you get audited.
- Reuse and renew. Your LMN is valid for one year. You can use the same letter for repeat purchases during that time. A few weeks before it expires, Lemonaid Health will email you. Come back to update your information. A clinician will review and write a new letter if you still qualify.
Common HSA/FSA myths and FAQs
Myth: All fitness costs are HSA/FSA eligible.
Fact: Fitness costs only qualify if exercise helps you prevent or treat a medical condition. To get those costs to qualify, you need a Letter of Medical Necessity explaining the connection.
Myth: You can only use HSA/FSA funds for medical visits.
Fact: You can use HSA/FSA funds for many medical expenses. These include prescriptions, OTC drugs, blood work fees, birth control, and more.
Myth: You need a new LMN for every purchase.
Fact: You can use the same LMN for repeat purchases made within the same year as the date on the letter. If you want to purchase a different item, you need a different LMN. For example, you can’t use the same LMN for gym fees and nutrition coaching.
Myth: You need to submit an LMN with every purchase.
Fact: This depends on your HSA/FSA administrator. Some administrators record the period your letter covers, so you only need to submit it once. Others may ask for it with every purchase. And some don’t require it before reimbursing purchases. In that case, you’ll want to store it somewhere you can easily access it if requested.
Myth: You need to see an in-person doctor to get an LMN.
Fact: Answer a brief health questionnaire with Lemonaid Health to get a Letter of Medical Necessity online. For a $19 membership fee, we’ll connect you with a licensed clinician. They’ll review your information. If you qualify, they’ll write your LMN, and we’ll email you a link to it.
Myth: You can use your HSA/FSA card to pay for nutrition services.
Fact: If you have a condition like obesity, diabetes, Crohn’s disease, or high cholesterol, nutrition coaching may qualify. But you may need an LMN to qualify the costs. And you’ll probably have to pay with your debit or credit card and reimburse the amount from your HSA/FSA.
Ready to get your LMN and maximize your HSA/FSA savings?
