Can a Flexible Spending Account (FSA) Be Used for a Gym Membership?

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 disability or illness.

Key Takeaways

  • 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 $570.

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.

The Consolidated Appropriations Act of 2021 allows for more flexibility when it comes to carrying over unused FSA balances from plan years 2020 and 2021, as well as extending permissible grace periods for these plan years. If they choose to, employers can allow all unused funds to be carried over from 2020 to 2021 and from 2021 to 2022. Or employers can extend the grace period to 12 months, rather than 2.5 months. Either way, all unused funds from an FSA can be carried over and used throughout the entire next year.

If your company offers FSAs, then 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 2021, the FSA contribution limit is $2,750 for a qualified FSA, rising to $2,850 in 2022. Unfortunately, those who are self-employed are not eligible to participate in an FSA.

FSA accounts can also be used to pay for medical expenses for spouses or children under the age of 27, provided you have added them to your health plan. 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.

For cafeteria plans that permit the carryover of unused funds, the maximum carryover amount is $570, an increase of $20 from taxable years beginning in 2021.

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 for insulin, as qualified medical expenses. All qualified medical expenses must require a doctor's prescription.

The IRS does not allow FSA funds to be used for paying health insurance premiums and long-term care coverage. Also, the IRS considers gym membership to be a general health cost a person does not have to necessarily 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 his specific condition. In this case, FSA funds may be used to pay for a gym membership. Also, special group exercises or fees paid for classes in a gym that are prescribed by a doctor to treat specific diseases may be considered qualified medical expenses.

Other less-common qualified expenses include lodging or housing costs, if you incurred any because of medical treatment. In this case, meals would also be a qualified medical expense.

Article Sources
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  1. Internal Revenue Service. "Publication 502 (2021), Medical and Dental Expenses." Accessed Jan. 16, 2022.

  2. Internal Revenue Service. "Publication 969: Health Savings Accounts and Other Tax-Favored Health Plans," Page 16. Accessed Jan. 16, 2022.

  3. Internal Revenue Service. "IRS Provides Tax Inflation Adjustments for Tax Year 2022." Accessed Jan. 16, 2022.

  4. Internal Revenue Service. "Additional Relief for Coronavirus Disease (COVID-19) Under § 125 Cafeteria Plans," Pages 7 and 12. Accessed Jan. 16, 2022.

  5. Internal Revenue Service. "Publication 15-B: Employer's Tax Guide to Fringe Benefits," Page 4. Accessed Jan. 16, 2022.

  6. Internal Revenue Service. "Publication 969: Health Savings Accounts and Other Tax-Favored Health Plans," Page 17. Accessed Jan. 16, 2022.