How to Get Cash From FSA Card + Can You Return FSA Items for Cash?

Out-of-pocket medical expenses can put a serious dent in your budget, but setting up a flexible spending account (FSA) can help ease the financial burden of co-pays, deductibles, and other expenses not covered by your health insurance.

The money in your flexible spending account is meant to go toward health care costs, and while you can use your FSA card to buy a variety of items, you cannot use it to get cash. It is also unlikely that you will be able to return items you bought using your FSA card for cash. Continue on to find out more about how and where you can use your FSA, including the possibility of getting cash from your FSA card.

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What Is a Flexible Spending Account?

A Flexible Spending Account (FSA) is an employer-based monetary account that is funded through pre-tax deductions from your paycheck — some employers may also contribute to your FSA. The account’s sole purpose is to cover out-of-pocket health care expenses. Contributions to your FSA are deducted from your paycheck based on criteria set by your employer. You can contribute up to $2,600 or $5,000 annually, depending on the type of FSA program. The three types of FSA programs include:^[1]

Health Care: This is a standard FSA that covers a wide range of medical expenses. The standard contribution is $2,600.
Limited Purpose: This is a targeted FSA that only covers specific medical expenses, such as dental care and eye care. The standard contribution is $2,600.
Dependent Care: This type of FSA is meant to pay for the care of dependents who need specific types of medical care. Dependents in this context are children under the age of 13, a spouse, or a relative with mental or physical disabilities. The standard contribution is $5,000.

FSA accounts are usually offered as part of your employment benefits package. You can contact the human resources department or a supervisor in charge of benefits to find out if your employer offers one or more of the above FSA programs.

Can You Get Cash From Your FSA?

It’s not possible to receive cash from your FSA. Regardless of the amount of money you have in your FSA account, it’s not the type of account you can dip into when you need fast cash, as there are strict rules set by the Internal Revenue Service regarding how this money is to be handled.^[2]

While your employer may offer a grace period — an extension of usually a couple of months during which you can spend the remainder of the money in your FSA — or allow you to roll over up to $500 for use in the following year, any other money in your account not spent during the calendar year will expire.^[3] It is up to you to spend your FSA funds before they expire. Fortunately, there are a variety of ways you can spend this money.

What Can You Buy With Your FSA Debit Card (Flex Card)?

After enrolling in an FSA program, you’re usually issued an FSA debit card, which is also known as a Flex Card. Your Flex Card operates like any other debit card, except you can only use it to buy health items. You may not even want to get cash from your FSA card after seeing what all you can buy. A wide range of health-related items fall under the Flex Card spending umbrella, including products and services in the following areas:^[4]

Acne treatments: Over-the-counter cleansers, ointments
Acupuncture treatments
Allergy/asthma relief: Over-the-counter allergy medications, eye drops
Baby care: Formula, sunscreen
Breathing aids: Steam inhalers, vaporizers
Carpal tunnel relief: Braces and similar devices
Chiropractic care
Cold and flu relief: Over-the-counter medications, nasal sprays
Dental care: Denture cleansers and adhesives, dental guards
Diabetes treatment: Diabetes test strips, blood sugar monitors
Digestive health: Stomach acid reducers, nausea soothers, probiotics
Ear care: Ear drops, ear wax removal systems
Eye care: Eye drops, contact lens cleaners
Fertility: Pregnancy tests, ovulation test kits
First aid: Kits and supplies
Foot care: Bandages, braces, orthotic inserts
Incontinence care: Pads and briefs
Lip care: Cold sore treatments
Mobility assistance: Canes, walkers, mobility scooters
Pain management: Compresses, heating pads, therapeutic braces
Skincare: Sunscreen lotions and creams
Smoking cessation: Gum, lozenges, patches
Support braces: Braces that support and stabilize ankles, back, neck, knees, and other areas of the body

Where to Spend Your FSA Funds

Costco

Eligible products: Items from the pharmacy, optical, and hearing aid centers. Our related article has the list of FSA-eligible items at Costco.
Shop for FSA products or find a Costco

CVS

Eligible products: Each FSA in-store item you purchase at CVS is flagged and appears on your receipt. At the end of the year, CVS provides a free year-end report for all ExtraCare cardholders. CVS also notes a program change that prevents debit card purchases of certain items.^[5]
Shop for FSA products or find a CVS

FSA Store

Eligible products: The FSA Store has an ‘ask an expert’ feature on its website; you can submit questions of your own and then read specific answers to customer questions.^[6]
Shop for FSA products

Target

Eligible products: First aid, home health care and living aids, medicines and supplements, mobility aids, personal care, and sexual wellness and feminine hygiene.^[7]
Shop for FSA products or find a Target

Walgreens

Eligible products: Children’s health care, skincare, family planning, feeding essentials and baby care, home medical equipment, and incontinence; you can purchase FSA eligible products in-store or online using your FSA card. You can also purchase some prescription items, but you may need to get a list of eligible items from your health care provider.^[8]
Shop for FSA products or find a Walgreens

Walmart

Eligible products: Diabetic supplies, diagnostics, eye and contact care, and first aid; Walmart offers free home delivery for FSA purchases. You can purchase eligible items using your FSA debit card, cash or credit card. For in-store purchases, all FSA items appear on a paper receipt, coded with an ‘H’ on the right side of the product’s UPC code. FSA items also appear as a separate sub-total for easy recordkeeping.^[9]
Shop for FSA products or find a Walmart

Can You Return FSA Items for Cash?

You can return health-related items bought through your FSA account and how you’re refunded is at the discretion of each store. However, it’s highly unlikely you’ll receive cash back for those returns. Retailers may instead let you choose between debiting the purchase amount to your Flex Card and receiving the refund in the form of store credit.

Many employers strictly regulate how and whether their employees can return FSA items for refunds. The University of Iowa, for example, has specific policies forbidding the abuse of FSA funds. Per those policies, mishandling return purchase funds may lead to consequences. You can check your employer’s FSA policy on returns for more information, or speak with a workplace supervisor or human resources manager.

Keep receipts for items purchased with your FSA account because this is documented proof for processing any returns. Some stores clearly mark FSA receipts to make record-keeping easier. For online purchases, product receipt information is usually contained within the body of an email sent to your inbox after purchase.

What Happens if You Use Your FSA Card for Non-Approved Purchases?

Stores like Walmart have systems that keep track of FSA-approved products they sell, and non-approved items may be automatically rejected for card payment approval.^[9] This means you’ll have to pay for those non-approved hair care items using your own cash, debit, or credit cards at checkout.

However, it’s possible that a store may not flag non-approved purchases properly. Perhaps you go to the store and purchase a few FSA-approved personal care items and throw in a pack of your favorite gummy bears. Or, perhaps you accidentally take out your FSA card and use it to pay for the pizza you ordered, mistaking it for your debit card.

According to a Forbes.com article, you must report these non-eligible items on your federal tax form and pay a 20% tax penalty for these purchases.^[10] Because everything purchased with an FSA card is reportable, you are required to report these items as ‘ineligible expenses’ when filling out the Health Savings Accounts IRS form.

Note: You may have heard people say they purchased eligible items with their FSA money and then sold them for cash. You may have also heard people saying they made qualifying purchases with their FSA card, only to return them and request store credit, thereby allowing them to purchase other, non-FSA-eligible items. These and similar activities amount to tax fraud and are not recommended.

What Actions Might Your Employer Take?

Employers don’t take non-qualified expenditures lightly. If you purchase non-medically approved items with your FSA card, your employer has the right to deactivate your FSA card and demand that you repay all the monies for these improper charges back to the employer-run FSA account.^[11] After you make the payment, your employer can reactivate your account. If you fail to repay on your own, your employer can legally take the funds out of your paycheck. If these measures don’t settle the debt, your employer can take additional legal measures to recover the money.

Considering the high price connected with misusing FSA accounts, it’s much better on your wallet to avoid using your FSA card for anything but approved medical expenses.

For even more information about using FSA funds, we explain how to use an FSA at Massage Envy.