What FSA and HSA Accounts Really Do — and How They Can Support Your Wellness: An Explanation
- Chris
- Apr 27
- 6 min read
Created by Christopher Caffrey, PMHNP, ACNP
April 27th, 2025
Taking care of your health isn’t just about doctor visits or prescriptions. It’s the everyday things you do — or want to do more of — like getting regular massages, going to fitness classes, working with a personal trainer, improving your sleep with a quality mattress, or using supplements to support your energy, digestion, or focus. These proactive, holistic choices are not included in the narrow list created by the IRS— but here’s the good news: your FSA or HSA can actually cover them.
With a Letter of Medical Necessity, many of the wellness expenses you’re already paying for out of pocket can become eligible for tax-free reimbursement. That means you can use pre-tax dollars to support your health in meaningful, preventative ways — and keep more money in your pocket while doing it.
It’s not about waiting until you're sick. It’s about investing in feeling well now — and making the system work for you.
So, What Is an FSA or HSA?
Think of an FSA or HSA like a health piggy bank. But instead of quarters and dimes, you’re stuffing it with tax-free money. That’s right – the government says, “Go ahead, save this cash and we won’t touch it.” Weird, I know.
FSA = Flexible Spending Account
Usually offered by your employer.
“Use it or lose it” by the end of the year.
Think of it like Cinderella’s coach – it turns back into a pumpkin if you don't use it by midnight (aka December 31st).
HSA = Health Savings Account
You must be on a high-deductible health plan (HDHP) to qualify. Think of that as the cover charge to get into this money-saving club.
Unlike FSA, your money rolls over forever, builds interest, and can even be invested.
It’s like a Roth IRA had a baby with your doctor’s bill.
Important Caveat:
If you want an HSA, you can’t just grab any health plan with a fat deductible and call it a day. The IRS has rules (because of course they do). Your plan has to be a legit High Deductible Health Plan (HDHP) — not just “kinda” high-deductible, but officially HSA-eligible.
Here’s what that actually means in 2025:
Minimum Deductible:
$1,600 for individual coverage
$3,200 for family coverage
Maximum Out-of-Pocket Limit (includes deductibles, copays, coinsurance):
$8,300 for individual coverage
$16,600 for family coverage
No benefits paid until you hit your deductible — unless it’s preventive care. So things like annual physicals, screenings, and vaccines are fair game, but everything else? You’re paying out of pocket until you reach that deductible.
Your plan must be labeled “HSA-eligible.” If it doesn’t explicitly say that, it’s not the real deal — and you’ll be stuck without the tax perks.
Bottom line: Just because your health plan has a giant deductible doesn’t mean it qualifies. Look for “HSA-eligible HDHP” in the fine print, or you’ll end up trying to open an HSA the IRS won’t let you touch — like trying to build a treehouse without a tree.
How They Work (And Why You Should Care)
You throw money into these accounts before taxes. That means the IRS can’t take its usual slice of your paycheck on this portion. Then, when you spend it on eligible health stuff – like co-pays, prescriptions, contact lenses, or even that bougie sunscreen with SPF 90 – you don’t pay taxes on that either.
Real-World Translation?
You’re basically getting a 30% discount on health expenses. Every. Single. Time.
Let’s do the math for the nerds and skeptics:
Say you earn $80,000 a year and decide to set aside $2,000 into your FSA or HSA.
At that income level, your combined tax rate (federal, state, social security, medicare, payroll) is probably around 28-32%, give or take depending on your filing status.
You still spend $2,000 — but you keep $640 that would’ve gone to taxes. Just for using your money differently. Now instead going toward stuff you were going to buy anyway – doctor visits, meds, tampons, vitamins, whatever.
What’s Covered (and What’s Not)
Here’s where it gets sexy and annoying.
What’s Covered Without Question:
Copays, deductibles
Eyeglasses and contact lenses
Prescription meds
Some over-the-counter meds
Menstrual products, first aid stuff, crutches (hopefully not all at once)
What’s Not Covered… Unless You Hack the System:
Personal trainers
Gym memberships
Supplements, vitamins, probiotics, green drinks
Sleep aids like therapeutic mattresses
Cool stuff like red light therapy, saunas, cold plunges
Functional medicine specialists
Fitness classes
These things can be covered, but the IRS wants a golden ticket first.
It’s called a Letter of Medical Necessity (LMN).
The LMN Hack: How to Unlock Coverage Like a Boss
A Letter of Medical Necessity is basically a doctor's note for grown-ups. It says, “Hey IRS, this person needs XYZ for a legitimate health reason.”
When you get one of these, your FSA or HSA can suddenly cover:
Your fancy probiotic
That overpriced memory foam mattress
The gym membership you use once a week (but hey, it's for your anxiety, right?)
Personal training to reverse your prediabetes
Nutritional therapy for IBS, ADHD, or chronic fatigue
With an LMN, it’s like the floodgates of tax-free spending open wide.
No LMN = you pay with post-tax dollars. With LMN = same thing, but with a 30% discount.
Need an Example?
Alright, let’s say you’re about to drop $4,000 on a high-end therapeutic mattress. We’re talking full setup — memory foam heaven, ergonomic pillows, mattress protector, the whole “I finally sleep like a functioning adult” package.
Now, if you just swipe your regular credit card for that, you're paying with post-tax dollars — meaning you already got taxed on that income before you spent it. But if you use your FSA or HSA (with a valid Letter of Medical Necessity), that same purchase becomes tax-free.
Here’s how the savings shake out:
Cost of mattress setup: $4,000
Your tax rate (federal, state, payroll): let’s say roughly 30%
What you’d have to earn to afford that mattress after tax: ~$5,714
What you actually spend using your HSA/FSA (pre-tax): $4,000
Money saved by using pre-tax dollars: ~$1,714
That’s over $1,700 back in your pocket just for using the system the way it was designed. That’s not a discount — that’s a legal tax sidestep. It’s like the government saying, “Hey, if you’re going to take care of your body, we’ll stay out of your wallet.”
What You Need:
A legit Letter of Medical Necessity (LMN) saying the mattress is required for a medical reason — back pain, insomnia, chronic fatigue, etc.
An FSA or HSA set up and funded.
A plan that qualifies as an HSA-eligible HDHP, if you’re using an HSA.
This Letter of Medical Necessity can apply to almost anything health related.
How to Actually Set These Accounts Up (So You Stop Wasting Money)
Alright, this part’s less sexy, but necessary. Like flossing.
For an FSA:
Check with your employer. These are usually offered through work. If your HR department doesn’t have it, they might still be using fax machines and dial-up internet.
Enroll during open enrollment. It’s usually once a year (fall-ish), but some life events (baby, marriage, job change) can trigger exceptions.
Choose your amount. In 2025, you can put up to $3,200 per year.
Use it wisely. And before New Year’s Eve, unless your plan gives you a grace period or a carryover (up to $640 in 2025).
For an HSA:
Get on a High-Deductible Health Plan (HDHP). This is key.
Open an HSA. You can do this through a bank, financial institution like Fidelity, credit union, or health insurance provider.
Contribute your money. In 2025, limits are:
$4,150 for individuals
$8,300 for families
Extra $1,000 if you're 55 or older (because your back hurts and life is expensive)
Invest it (optional but baller move). Some HSAs let you invest like a mini retirement account. Your money grows, tax-free.
Why Everyone Isn’t Doing This (And Why You’re Smarter Than Most People)
Most people don’t use FSAs or HSAs because:
They don’t understand them.
They think it’s “too complicated.”
Or their employer never explained it well because Chad from HR was too busy planning the office ping pong tournament.
Translation: Ignorance = losing money.
You, however, just got 1,550 words of financial enlightenment. And you now know that with a little effort and an LMN in your corner, your health expenses don’t have to rob your checking account anymore.
One More Thing: How to Get That Magic Letter
Doctors don’t just hand out Letters of Medical Necessity like candy. In fact, most don’t even know what they are, or they’ll ghost you when you ask for one.
That’s why Flexup Wellness exists. We’re a telehealth service that helps you get that LMN fast, written by licensed professionals who actually understand what the IRS wants.
You tell us what you need covered. We evaluate your case. You get a customized, legitimate LMN – no awkward waiting room small talk required.
Now Go Save Some Money
If you’re tired of getting nickel-and-dimed by the system and want to finally win at healthcare without selling a kidney, go open an FSA or HSA account.
And if you’ve already got one, use it smarter. Get that LMN, claim your 30% discount, and stop leaving money on the table like a chump.
You’ve got options. You’ve got knowledge. And now you’ve got no excuse.