Can you use FSA funds to pay for a gym membership or exercise classes? The Internal Revenue Service (IRS) typically does not allow funds from a Flexible Spending Account (FSA) to pay for membership dues at health clubs or gyms.
However, the IRS allows FSA funds to be used for paying separate fees charged at health clinics or physical therapy centers for specific activities prescribed by doctors for an individual. The physician must issue a statement (i.e., put in writing) that the treatment is necessary to alleviate a physical or mental condition or illness.
- A flexible spending account (FSA) allows employees to use pre-tax dollars out of their paychecks to cover qualified health expenses.
- Generally, gym and health club memberships, along with exercise classes (like Pilates or spinning), cannot be covered by FSA funds.
- However, under certain (and rare) circumstances, FSA funds may be used for a gym membership if a doctor has prescribed specific activities to treat a particular condition, injury, or illness.
- FSA accounts must be spent during the calendar year, although some plans allow for a rollover period for amounts up to $610 in 2023, up from $570 in 2022.
How Do Flexible Spending Accounts Work?
Employees use FSAs to set pre-tax dollars aside to cover various qualified medical expenses. FSAs are typically funded through salary reduction agreements with employers, and contributions to FSAs are exempt from employment and federal income taxes. Also, employers may choose to contribute to FSAs. Companies have two choices on how to disperse FSA funds—via reimbursement (meaning the employee will be responsible for providing all receipts) or a debit card designed to use FSA funds.
If your company offers FSAs, you will need to enroll before the new year's medical plan begins. Distributions from FSAs are typically tax-free if they are used for qualified medical expenses. In 2023, the FSA contribution limit is $3,050 for a qualified FSA, up from $2,850 in 2022. Unfortunately, self-employed people are not eligible to participate in an FSA.
FSA accounts can also be used to pay for medical expenses for spouses or children under 27, provided you have added them to your health plan.
For cafeteria plans that permit the carryover of unused funds, the maximum carryover amount is $610 in 2023, an increase of $40 from 2022's $570.
Qualified Medical Expenses
The IRS issued Publication 502, which defines qualified medical expenses as those indicated in the FSA plan that would typically qualify for deduction as medical and dental expenses. For example, FSA plans can be used for chiropractor visits, prescriptions, contact lenses and eyeglasses, and co-pays at the doctor's office.
However, the IRS does not consider nonprescription medicines except insulin as qualified medical expenses. All qualified medical expenses require a doctor's prescription.
Other less-common qualified expenses include lodging or housing costs resulting from medical treatment. In this case, meals would also be a qualified medical expense.
The IRS does not allow FSA funds to pay health insurance premiums and long-term care coverage. Also, the IRS considers gym membership a general health cost a person does not necessarily have to incur to treat a specific medical condition.
In rare circumstances, a doctor may issue a medical note advising an FSA beneficiary to enroll in a gym to treat a specific condition. In this case, FSA funds may be used to pay for the membership. Also, special group exercises or fees paid for classes at a gym prescribed by a doctor to treat specific conditions may be considered qualified medical expenses.
Are Gym Memberships Eligible for FSA?
Your FSA funds cannot be used to pay for a gym membership unless under specific, doctor-prescribed conditions.
What Can I Use FSA Funds For?
You can use FSA funds for medical expenses not covered by your health plans, such as a deductible or co-pay.
How Do I Know if I Have FSA Funds?
To check your balance, you log in to your FSAFEDS account.
The Bottom Line
A flexible spending account can be used for many medical expenses, but under most conditions, a gym membership is not a necessary medical expense. However, this does not mean you'll never be able to use your FSA to pay for the membership—but it does mean you'll have to convince your doctor and the IRS that it is necessary to treat your condition.