Can You Pay for Acupuncture with an HSA or FSA?

Is acupuncture HSA eligible? Yes. The IRS lists acupuncture as a medical expense, which means you can generally pay for it with money from a Health Savings Account (HSA), a health Flexible Spending Arrangement (FSA) or a Health Reimbursement Arrangement (HRA). The details are where people run into trouble: which kind of account you have, whether your administrator wants a Letter of Medical Necessity, whether herbs count, which records to keep, and when FSA money runs out.

This article goes through each of those points using the IRS's own publications, so you can use your account with confidence and avoid a denied claim or an unexpected tax bill. Where a rule depends on your particular plan, we say so. Your plan administrator has the final word on any individual claim.

Is acupuncture HSA eligible? What the IRS says

IRS Publication 502 lists the costs you can count as medical expenses, and acupuncture has its own entry. It reads, in full: "You can include in medical expenses the amount you pay for acupuncture." There are no conditions attached to that entry.

Publication 502 is written for the itemized medical expense deduction, but the tax-advantaged health accounts use the same definition. IRS Publication 969, which covers these accounts, defines qualified medical expenses for an HSA as amounts paid for medical care under section 213(d) of the tax code, the same section behind Publication 502. For FSAs and HRAs, it says qualified expenses are those specified in the plan that would generally qualify for the medical and dental expenses deduction.

One wider principle applies to every expense. Publication 502 defines medical expenses as the costs of diagnosis, cure, mitigation, treatment or prevention of disease, and it says they must be mainly to relieve or prevent a physical or mental disability or illness. Expenses that are merely good for general health, such as vitamins or a vacation, do not count. Acupuncture for back pain, migraine or another health problem fits the definition comfortably. If your administrator wants more detail about the medical purpose of a claim, a Letter of Medical Necessity provides it.

At our clinic, acupuncture is a qualified expense for HSA, FSA and HRA funds, and we accept HSA and FSA cards. The clinic's own summary is on our HSA and FSA page.

HSA, FSA and HRA: how the three accounts differ

All three let you pay for qualified medical expenses without income tax, but they are built differently. Who owns the money, whether it rolls over, and who can have one all differ.

Health Savings Account (HSA)

An HSA is a savings account that belongs to you. According to Publication 969, you can contribute to one only if you are covered by a high deductible health plan on the first day of the month, have no other disqualifying health coverage, are not enrolled in Medicare, and cannot be claimed as a dependent on someone else's tax return. HealthCare.gov describes an HSA-eligible plan as one that generally covers only preventive services before the deductible.

The main features, from Publication 969:

• Contributions are tax deductible or excluded from income, earnings in the account are tax free, and withdrawals for qualified medical expenses are not taxed.
• Money that is not spent carries over to the next year. You do not have to take withdrawals every year.
• The account is portable. It stays with you if you change employers or stop working.
• You can use it for qualified expenses of your spouse and dependents, not only your own.
• Expenses incurred before the HSA was established do not qualify. State law determines when an HSA counts as established.
• If you take money out for anything that is not a qualified medical expense, it is taxed as income, and an additional tax may apply as well.

Medicare enrollment stops new contributions, but it does not freeze the account. HealthCare.gov notes that HSA funds can be used at any time for qualified medical expenses, so money already saved can still pay for acupuncture later in life.

Health Flexible Spending Arrangement (FSA)

An FSA is a benefit your employer sets up. You choose how much to set aside from your pay through a salary reduction agreement, and your employer may add to it. Publication 969 notes that self-employed people are not eligible for FSAs.

Two features matter most for a course of acupuncture. First, you can use the full amount you elected for the year at any time during the coverage period, even before it has all been taken from your pay. Second, FSAs are generally use-it-or-lose-it. We cover the deadlines in more detail below.

The FSA also cannot pay in advance for future or projected expenses. It reimburses care you have already received. That matters if you are ever offered a prepaid block of sessions: the FSA pays for each visit once it happens, not for visits that have not happened yet.

Health Reimbursement Arrangement (HRA)

An HRA is funded only by your employer. You cannot contribute from your salary, and self-employed people are not eligible. Reimbursements for qualified medical expenses are tax free, and Publication 969 says unused amounts can be carried forward to later years. HealthCare.gov describes HRAs as reimbursing up to a fixed dollar amount per year set by the employer.

An HRA reimburses expenses incurred on or after the date you enrolled. Because it is not a savings account in your name, you usually pay first and claim afterwards, unless your employer gives you an HRA debit card to use at the time of service.

If you have an HSA and an FSA at the same time

This is the combination that catches people out. Publication 969 says that if you are covered by a high deductible plan and a general health FSA or HRA that reimburses medical expenses, you generally cannot contribute to an HSA. The arrangements Publication 969 allows alongside an HSA include a limited-purpose FSA or HRA and a post-deductible FSA or HRA.

A limited-purpose arrangement can pay only for a short list of items, such as dental care, vision care and preventive care. Acupuncture is not on that list. A post-deductible FSA or HRA can pay only once a minimum annual deductible has been met. So if you have an HSA and a limited-purpose FSA, pay for acupuncture from the HSA, not the FSA. If you are not sure which type you have, your benefits paperwork or the FSA administrator will tell you.

When you need a Letter of Medical Necessity, and what it contains

A Letter of Medical Necessity (LMN) is a short document from a licensed practitioner explaining why a treatment is needed for a specific medical condition. You need one when your account administrator asks for it. There is no single national rule about when that is, because each administrator sets its own review process.

Administrators most often ask for an LMN when an expense could be either medical or personal. FSAFEDS, the FSA program for federal employees, has its provider complete the letter for expenses that fall into its "maybe" or "ineligible" categories when the provider believes the treatment is medically necessary. Because acupuncture is named in Publication 502, its purpose is rarely in doubt, but some plans still require a letter before they pay. Your administrator will tell you whether yours does.

The FSAFEDS form is a good model of what a Letter of Medical Necessity usually contains:

• The patient's name, and the account holder's details if they are different.
• The medical condition being treated.
• The recommended treatment, including the specific service or item, how often, and the dosage where relevant.
• How long treatment is expected to last. For a chronic condition, FSAFEDS asks the practitioner to write "lifetime."
• A statement that the treatment is not for general health or cosmetic purposes.
• The printed name, signature and date of the licensed practitioner.

Two practical points. First, the letter does not get you reimbursed on its own. FSAFEDS, for example, still needs a claim form with supporting documentation for each expense. Second, check whether your administrator has its own form and how long it treats a letter as valid before a new one is needed.

If your administrator asks for a letter, tell us. Dr. Gandapodi can provide one for acupuncture. It helps to bring the administrator's form, if it has one, so the letter matches what they want to see.

Do herbs and supplements qualify?

This is the area where we would rather you be cautious. Acupuncture has a clear IRS entry. Herbal products do not; they fall under a stricter rule.

Publication 502 says you cannot include the cost of nutritional supplements, vitamins, herbal supplements or "natural medicines" unless they are recommended by a medical practitioner as treatment for a specific medical condition diagnosed by a physician. Otherwise the IRS treats them as items taken to maintain ordinary good health, which do not count. The IRS repeats the same rule in its questions and answers on nutrition and wellness expenses.

Three things follow from that wording.

• A specific diagnosed condition is required. Herbs taken for general wellbeing do not qualify, however sensible they may be.
• Note the words "diagnosed by a physician." Your administrator may want to see that the condition has been diagnosed by your physician, as well as a recommendation from the practitioner who prescribed the herbs. Keep copies of the relevant diagnosis from your own doctor.
• Ask whether a Letter of Medical Necessity is needed. Your administrator decides what documentation it wants for these items.

You may have read that over-the-counter medicines now qualify without a prescription. Publication 969 does say that for HSAs, FSAs and HRAs, over-the-counter medicine counts as medical care whether or not it is prescribed. Do not assume that covers herbal formulas. The IRS names herbal supplements and "natural medicines" specifically under the supplement rule, so treat herbs under that rule unless your administrator tells you otherwise.

Our advice is simple. Before you pay for herbs with account money, ask your administrator whether they will accept the expense and what documentation they need. If the answer is unclear, pay with other money. A claim that is later found not to qualify is taxable, and for an HSA an additional tax may apply on top.

The same caution applies to Ayurvedic treatment, Panchakarma and Transdermal Medication Therapy. The IRS does not list them by name, so whether they qualify depends on the general definition of medical care and on your administrator's view. Ask first. At our clinic these treatments, and Chinese herbal medicine, are not billed to insurance, so the question of how you will pay for them is worth settling before you start. You can read about each on our treatments page.

Using your account alongside insurance

If your health plan covers acupuncture, your HSA, FSA or HRA can pay your share. HealthCare.gov describes HSAs as a way to use untaxed dollars to pay deductibles, copayments and coinsurance, and the FSA glossary entry lists copayments and deductibles as allowed expenses too. This is often the most efficient arrangement: the insurer pays its part, and the account pays yours with pre-tax money.

The rule to remember is that the same expense cannot be paid twice. Publication 969 limits HSA qualified expenses to amounts not compensated for by insurance or otherwise, and FSA claims need a statement that the expense has not been paid or reimbursed under any other health coverage. In practice, let the insurance claim go through first, then pay your share from the account using the Explanation of Benefits as your record.

The same no-double-counting principle applies at tax time. Publication 502 says you cannot include in your itemized medical deduction any expense paid with tax-free HSA money or fully reimbursed by an FSA or HRA.

If you want help with the insurance side, start with our free benefits check. Dr. Gandapodi is in network with most insurance plans. The clinic does not participate in Medicare or Medicaid, but it accepts most Medicare Advantage plans that include acupuncture. Insurance covers acupuncture only, and the check takes 3 to 5 business days through our verification form. If you were hurt in a car accident, the clinic also bills auto insurance personal injury protection (PIP) for acupuncture. Mention the accident when you book, and have your auto insurance claim number ready. More is on our insurance page, and we explain the cost side in our guide to paying for acupuncture in New Jersey.

Keeping receipts and records

Good records are what make an account claim succeed, and for an HSA they are your protection if the IRS ever asks.

Publication 969 says HSA owners must keep records showing that each withdrawal paid only for qualified medical expenses, that those expenses were not paid or reimbursed from another source, and that they were not also taken as an itemized deduction. You do not send these records with your tax return. You keep them with your tax records.

FSAs have a similar requirement at the claim stage. Publication 969 says you must give the FSA a written statement from an independent third party, such as an itemized receipt, showing that the expense was incurred and how much it was. If you pay with an FSA or HRA debit card, Publication 969 says you may not have to send more information when the card transaction meets certain substantiation methods. Keep the receipt anyway in case you are asked for it.

FSAFEDS lists what supporting paperwork should show, and it is a useful checklist for any account:

• The patient's name.
• The provider's name.
• The date of service.
• A description of the service.
• The amount you paid, or the part insurance did not cover.

A card-machine slip that shows only a total does not meet that standard. Ask for an itemized receipt at each visit, or for a statement covering several visits, and keep it with any Explanation of Benefits and your Letter of Medical Necessity.

A simple system works best. Keep a folder, paper or digital, for each tax year. Put every receipt, letter and insurer statement in it as soon as you get it. If you pay a bill from other money and plan to reimburse yourself from your HSA later, mark the receipt so you know it has not yet been claimed.

FSA deadlines, grace periods and carryovers

FSAs are generally use-it-or-lose-it. Publication 969 says money left at the end of the plan year usually cannot be carried into the next year, but the plan may offer one of two exceptions, never both:

• A grace period of up to two and a half months after the plan year ends, during which new expenses can be paid from the leftover balance.
• A carryover of a limited amount into the next plan year. Anything above the plan's carryover limit is forfeited.

Your employer is not allowed to refund unused FSA money to you. Check your plan documents, too, for the date by which claims for the year must be submitted. It is easy to miss.

HSAs work differently. There is no year-end deadline, because unspent money stays in the account. HRA balances may also be carried forward, depending on how your employer has set up the plan.

Planning a course of acupuncture around your plan year

Because the full FSA election is available early in the plan year, an FSA works well for a course of treatment that starts in the first months of the year. Toward the end of the year the question becomes whether you will use the balance in time. A few points help:

• Check your FSA balance and your plan's grace period or carryover rule a few months before the year ends.
• If you are starting treatment late in the year, remember that the FSA pays only for visits that have already happened. Leftover money can pay for next year's sessions only through a grace period or a carryover, if your plan has one.
• When choosing next year's election, think about how many visits your plan of care is likely to involve. Our article on how many acupuncture sessions you may need explains the usual ranges.
• Do not book treatment you do not need just to spend a balance. A good plan of care is based on how you respond, not on a deadline.

Common mistakes that lead to denied claims or tax bills

1. Paying from a limited-purpose FSA. If your FSA sits alongside an HSA, it probably cannot pay for acupuncture.
2. Using an HSA for care received before the account was opened. Those expenses do not qualify.
3. Assuming herbs follow the acupuncture rule. They do not. Check with the administrator first.
4. Keeping only card slips. Get an itemized receipt showing the patient, provider, date, service and amount.
5. Claiming twice. If insurance paid part of a visit, only your share is eligible, and anything paid from an account cannot also go on Schedule A.
6. Prepaying from an FSA. The FSA reimburses care already received, not future visits.
7. Missing the claims deadline. Note your plan year's end date and any claim filing deadline.

What your account money pays for: the evidence

Paying with pre-tax money helps with the cost, but the question of whether it is worth trying still deserves an honest answer. The National Center for Complementary and Integrative Health (NCCIH), part of the National Institutes of Health, summarizes the research on acupuncture by condition.

• Back and neck pain: a 2018 review found acupuncture more effective than no treatment (12 studies, 8,003 participants) and than sham acupuncture (10 studies, 1,963 participants), with relief comparable to anti-inflammatory drugs. It is also a first-line nondrug option for chronic low back pain in the American College of Physicians' 2017 guideline.
• Osteoarthritis: a 2018 review found it better than no treatment and than sham. A 2019 guideline from the American College of Rheumatology and the Arthritis Foundation conditionally recommends it for knee, hip or hand osteoarthritis, though hip results were weaker.
• Migraine: moderate-quality evidence from 22 studies with nearly 5,000 people shows a reduction in how often migraines happen, with a small advantage over sham.
• Where it has not beaten sham: irritable bowel syndrome, carpal tunnel syndrome and menopausal hot flashes. For IVF, a 2021 review (6 studies, 2,507 participants) found pregnancy and live birth rates no different from sham.

We tell patients the same thing at the consultation. If the evidence for your condition is limited, we set a short trial with a clear review point, so neither your account balance nor your time is spent on care that is not working.

About your practitioner: Dr. Saikumar Gandapodi

Dr. Saikumar Gandapodi, DAOM, Dipl. OM, AP, L.Ac., is the founder and director of Netra Integrative Health Clinic. He treats every patient himself, in person, in South Plainfield. If your administrator asks for a Letter of Medical Necessity, it comes from the practitioner who assessed you and is treating you.

His practice centers on complex and advanced conditions. Many of his patients have already tried other practitioners and treatments without results, and arrive with long-standing pain, several overlapping problems, or symptoms that have never been fully explained. He cannot promise an outcome in any individual case, and he is direct at the consultation about what he thinks acupuncture and the clinic's other treatments can and cannot do for you.

Credentials

• DAOM: Doctor of Acupuncture and Oriental Medicine, a clinical doctorate from Five Branches University.
• Master of Traditional Oriental Medicine from Pacific College of Health and Science.
• Dipl. OM: national board certification in Oriental Medicine.
• L.Ac.: licensed as an Acupuncturist and Herbalist in New Jersey and New York.
• AP: board-certified Doctor of Oriental Medicine and Acupuncture Physician in Florida.
• Classically trained in Ayurvedic medicine, a graduate in Yoga Therapy, with advanced clinical training in India.

What he treats

Dr. Gandapodi combines Chinese medicine, Ayurveda and Yoga Therapy in an integrative approach. He specializes in complex and chronic conditions, orthopedic disorders, fertility and internal medicine, and he writes and clinically reviews the condition pages on this site. Browse them through our conditions search, or read more about him on the team page.

Your first visit and treatment sessions

The first appointment is a 60-minute consultation. Dr. Gandapodi takes a full history, asks about your symptoms, medicines and lifestyle, and examines your tongue and pulse. Treatment is generally not given on the same day. You leave with a proposed plan, including how often and for how long treatment is recommended, which is also the information an administrator may want in a Letter of Medical Necessity.

For that first visit, bring:

• A photo ID.
• Your insurance card, if you plan to use insurance.
• Your HSA or FSA card, and any Letter of Medical Necessity form your administrator uses.
• Your most recent complete blood work reports, which you can also send ahead.
• A list of the medicines and supplements you take.

Follow-up visits and treatment sessions are 30 minutes. Sterile, single-use needles are placed while you lie on a padded table, and you rest with them in place. Most people feel little more than a short prick, followed by a dull or heavy sensation around the point. Progress is reviewed as you go, and the plan changes if you are not improving. Details are on our new patients page.

Safety and warning signs

NCCIH reports relatively few complications from acupuncture, with problems linked to nonsterile needles and improper delivery. The FDA regulates acupuncture needles as medical devices and requires them to be sterile and for single use. Mild soreness, a small bruise or tiredness after a session can happen and usually settles within a day or two.

Let us know before treatment if you take blood thinners, have a bleeding disorder, are pregnant or might be, have a pacemaker or another implanted device, or have reduced immunity. Any herbs we prescribe are checked against the medicines you already take.

Some symptoms need a doctor or emergency department, not an acupuncture appointment, whatever your account balance:

• Chest pain or sudden shortness of breath.
• A sudden, severe headache unlike any before.
• New weakness, numbness, slurred speech or a drooping face.
• Back pain with loss of bladder or bowel control, or numbness between the legs.
• Fever with severe back or neck pain, or a stiff neck.
• Pain after a fall or accident.

Acupuncture as part of your wider care

Acupuncture at our clinic is complementary care, used together with your regular medical treatment. Keep seeing your physician and specialists. Do not stop or adjust a prescribed medicine without the prescribing doctor's advice. If symptoms improve and you want to reduce a dose, that decision belongs with them. With your consent, we can send a summary of your treatment to your physician, and doctors can refer patients through our referring providers page.

Questions patients ask about HSA and FSA payments

Is acupuncture HSA eligible without a prescription?

Yes. IRS Publication 502 lists acupuncture as a medical expense with no prescription requirement. Some administrators still ask for a Letter of Medical Necessity, and we can provide one.

Can I use my FSA card at the clinic?

Yes. We accept HSA and FSA cards for acupuncture. Keep the itemized receipt in case your administrator asks for it.

Can I use my HSA for my spouse's or child's acupuncture?

Generally yes. Publication 969 says HSA funds can pay qualified medical expenses for you, your spouse and your dependents.

Do Chinese or Ayurvedic herbs qualify?

Only under a stricter rule. The IRS allows herbal supplements only when a medical practitioner recommends them as treatment for a specific condition diagnosed by a physician. Ask your administrator before you use account money for them.

Does my limited-purpose FSA cover acupuncture?

Usually not. Limited-purpose FSAs, which are paired with HSAs, generally cover items such as dental, vision and preventive care. Use your HSA instead.

Can I reimburse myself later from my HSA?

You do not have to take HSA withdrawals in the year you pay, and expenses incurred after the account was set up can qualify. Keep the receipt and a note that it has not been claimed.

What happens if I use HSA money for something that does not qualify?

The amount is taxed as income, and an additional tax may apply. Publication 969 has the details.

How long is a Letter of Medical Necessity valid?

That depends on your administrator, so ask whether a letter covers one plan year or longer before you submit it.

Can I use my FSA to prepay a series of sessions?

No. An FSA cannot reimburse future or projected expenses. It pays for each visit after it takes place.

Will my FSA money roll over?

Only if your plan offers a carryover or a grace period, and it can offer one or the other, not both. Otherwise unused money is forfeited at the end of the plan year.

Can I use my HSA after I join Medicare?

You can no longer contribute once you are enrolled in Medicare, but you can still spend the money already in the account on qualified medical expenses, including acupuncture.

What if I do not have an HSA or FSA?

We also accept CareCredit, and discounts are available for seniors and through our financial assistance program. Our office can talk you through them on (908) 402-7301.

Booking an appointment

Book online through our appointment page or call (908) 402-7301. Bookings made online are confirmed by text message and email. If you plan to use insurance as well as your account, send your details through the verification form first and allow 3 to 5 business days. We are at 5001 Hadley Rd, Suite 210, South Plainfield, NJ 07080, open Monday to Friday from 10:00 AM to 8:00 PM and Saturday from 9:00 AM to 5:00 PM. Visits are by appointment only, and same-day openings are limited. Directions are on our location page.

This article is general information and is not tax, legal or medical advice. Your plan administrator decides individual claims, and a tax professional can advise on your situation. Tax rules are summarized from IRS Publications 502 and 969 and the IRS questions and answers on nutrition and wellness expenses. Account definitions come from the HealthCare.gov glossary, Letter of Medical Necessity and documentation guidance from FSAFEDS, and research and safety information from the National Center for Complementary and Integrative Health, all linked above.