Nursing home expenses are typically eligible for reimbursement with a Flexible Spending Account (FSA) or Health Savings Account (HSA) only when the primary reason for being in the facility is to receive medical care. Some non-medical custodial care expenses may also qualify under a Dependent Care Flexible Spending Account (DCFSA) when the individual meets the definition of a dependent who is incapable of self-care.
Why Are Nursing Home Expenses Conditionally FSA/HSA Eligible?
Under IRS Code Section 213(d), medical expenses are eligible when they are incurred for the diagnosis, cure, mitigation, treatment, or prevention of disease. This includes the cost of medical care in a nursing home when the stay is primarily for medical reasons.
According to IRS Publication 502, eligible nursing home expenses include:
Nursing services and medical care
Therapy or rehabilitation
Meals and lodging only when the stay is primarily for medical treatment
If the individual resides in a nursing home primarily for personal or custodial reasons—such as assistance with daily living or supervision—then only the medical portion of the expenses may qualify for FSA/HSA reimbursement.
What’s Not Covered?
Room and board for non-medical or custodial stays
Assisted living facilities that provide primarily personal care
Recreational activities or general wellness services
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Meals, lodging, and support services not tied to medical treatment
LMN and Exceptions
To qualify for FSA/HSA reimbursement, documentation must show the stay is primarily for medical care, which generally requires:
A Letter of Medical Necessity (LMN) or physician’s certification; and
Itemized billing distinguishing medical care from custodial care.
If the stay is partly medical and partly custodial, only the medical portion can be reimbursed.
Dependent Care FSAs (DCFSA)
A Dependent Care FSA does not reimburse medical expenses, but it may cover custodial care for a dependent who is unable to care for themselves, provided the care enables the account holder (and spouse, if applicable) to work. In some cases, this can apply to nursing home or adult day care services when the individual qualifies as a dependent under IRS rules.
FSA/HSA funds → reimburse medical care costs.
DCFSA funds → reimburse custodial care for dependents incapable of self-care.
Account holders should verify which account types apply to their situation before submitting claims.
