Is Lotion FSA/HSA Eligible?

No, lotion is generally not eligible for reimbursement through a Flexible Spending Account (FSA) or Health Savings Account (HSA).

Most lotions are classified as personal care or cosmetic products and do not meet the criteria for medical necessity under IRS and SIGIS guidelines.

Lotions are typically used for general hygiene, beauty routines, or minor skin hydration, which are not considered medically necessary purposes. Under IRS Code Section 213(d), FSA and HSA funds can only be used for products that diagnose, treat, or manage specific medical conditions. Everyday lotions without active medical ingredients fail the "but for" test, meaning they would still be purchased regardless of a diagnosed medical need.

Lotions that meet the following criteria may qualify for reimbursement:

• Medicated Lotions: Prescribed by a healthcare provider for conditions like eczema, psoriasis, or dermatitis.

• Therapeutic Creams: Products containing active ingredients such as urea, salicylic acid, or corticosteroids.

• Prescription-Strength Lotions: Specifically recommended as part of a medical treatment plan.

Everyday, over-the-counter lotions without specific therapeutic benefits remain ineligible for FSA/HSA reimbursement. Always confirm eligibility with your plan provider before making a purchase.

If your dermatologist prescribes a medicated lotion for a diagnosed skin condition, follow these steps to use your FSA or HSA funds:

1. Obtain a Letter of Medical Necessity (LMN):

   • Consult your healthcare provider and request an LMN. The letter should include:

     • Your diagnosis.

     • The prescribed lotion.

     • How the lotion helps treat or manage your condition.

2. Verify Approval With Your FSA/HSA Provider:

   • Submit the LMN to your FSA or HSA administrator to confirm the lotion qualifies for reimbursement.

3. Purchase the Lotion:

   • Use your FSA or HSA card to buy the product at an eligible retailer.

   • If the retailer does not accept FSA/HSA cards, pay out-of-pocket and retain your receipt.

4. Submit for Reimbursement:

   • If you paid out-of-pocket, provide your FSA/HSA administrator with the LMN and receipt. The receipt should include:

     • Name of the retailer or provider.

     • Date of purchase or service rendered (must fall within the FSA plan year).

     • Description of the product purchased.

     • Itemized details with UPCs if required.

     • Total purchase amount.

5. Maintain Documentation:

   • Retain copies of your LMN and receipts for your records in case additional verification is required.