Yes, co-insurance payments are eligible for reimbursement with a Flexible Spending Account (FSA) or Health Savings Account (HSA).
Why Is Co-insurance FSA/HSA Eligible?
Co-insurance refers to the portion of medical costs you are responsible for paying after your insurance has paid its share, typically expressed as a percentage (e.g., 20% of an allowed charge). These out-of-pocket payments are directly tied to medical care and are considered eligible medical expenses under IRS Code Section 213(d).
According to IRS Publication 502, co-insurance costs for qualified medical, dental, vision, and prescription drug services are reimbursable through FSA and HSA funds. As long as the underlying service is eligible, your portion of the cost is eligible too.
FSA- and HSA-eligible co-insurance costs may include:
Your share of a doctor’s visit, specialist consultation, or hospital stay
Co-insurance for dental cleanings, fillings, and other eligible dental work
Co-insurance for vision exams, corrective lenses, or eye procedures
Your portion of prescription medication costs after insurance coverage is applied
- Mental health or physical therapy visit co-insurance
What’s Not Covered?
The following are not eligible:
Co-insurance for services that aren’t medically necessary (e.g., elective cosmetic surgery)
Charges that are reimbursed by another source (like secondary insurance or a legal settlement)
Insurance premiums — these are not considered co-insurance and have separate eligibility rules (see below)
FSA vs. HSA: Are Insurance Premiums Covered?
It's important to distinguish co-insurance from insurance premiums. While your share of a bill for receiving care is eligible (co-insurance), your monthly insurance premiums are treated differently:
FSA funds cannot be used to pay insurance premiums under any circumstance.
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HSA funds can be used to pay certain insurance premiums, but only in the following limited situations:
COBRA continuation coverage
Health insurance premiums while receiving unemployment compensation
Qualified long-term care insurance (subject to IRS limits)
Medicare Part A, B, C, or D premiums (for those age 65 or older) — not Medigap
Unless one of these exceptions applies, premiums are not eligible expenses under either account type, but co-insurance almost always is—as long as the care itself is eligible.
How to Use Your FSA or HSA for Co-insurance
You can use your FSA or HSA card to pay your co-insurance amount directly to providers at the time of service. If you pay out of pocket:
Request an itemized invoice showing the amount billed, insurance coverage, and your co-insurance responsibility
Save your Explanation of Benefits (EOB) from your insurance provider
Submit these documents to your FSA or HSA administrator if required for reimbursement
For more information on eligible medical expenses, refer to IRS Publication 502.
