Assisted living costs are typically not eligible for reimbursement with a Flexible Spending Account (FSA) or Health Savings Account (HSA). In certain situations, portions of assisted living expenses may qualify if they are related to medical care and supported by a Letter of Medical Necessity (LMN).
Why Are Assisted Living Costs Not FSA/HSA Eligible?
Assisted living facilities provide a mix of housing, personal care, and some medical services. Because much of the expense covers non-medical costs like meals, rent, and personal assistance, the majority of assisted living fees do not qualify as medical expenses.
However, IRS Code Section 213(d) allows for the reimbursement of medical care costs, including services that diagnose, treat, or mitigate disease. According to IRS Publication 502, only the portion of assisted living expenses directly attributable to medical care may be eligible.
What’s Not Covered?
Room and board charges in assisted living facilities
Meals, housekeeping, or recreational activities
General custodial care without medical oversight
Personal expenses unrelated to medical treatment
LMN and Exceptions
Assisted living costs may qualify in part if a physician certifies that the resident requires medical care provided at the facility. An LMN is typically necessary when:
The resident has a diagnosed chronic illness that requires ongoing medical supervision
Daily medical services, such as administering medication, are provided
The stay is primarily for medical reasons rather than convenience or lifestyle
In these cases, only the portion of costs tied to medical care may be reimbursable.
To pursue reimbursement:
Request a detailed breakdown of charges from the assisted living facility, separating medical services from non-medical services.
Obtain a Letter of Medical Necessity (LMN) from the resident’s physician outlining the diagnosis and required care.
Submit the LMN and itemized statement to your plan administrator.
If approved, pay for eligible services with your FSA/HSA card or request reimbursement for qualified expenses.
Retain all documentation for your records in case of an audit.
Because plan administrators vary in how they evaluate assisted living expenses, always confirm eligibility in advance.
