Author: Ashlee Shefer
Reviewed By: Kristi Bickmann

A medical spending account may cover certain qualified memory care facility expenses, including nursing care, prescriptions and ambulatory equipment. It may also cover qualified insurance premiums. However, exact coverage depends on the type of medical spending account.

Health savings account (HSA) funds cover qualified long-term care services and insurance premiums, while a flexible spending account (FSA) typically covers co-payments, deductibles and prescription medications, although it doesn’t cover long-term care premiums. These accounts can help manage out-of-pocket medical expenses, making it easier to afford needed care. 

Which medical spending account should you enroll in?

The medical spending account you should enroll in depends on what you plan on using the funds for. FSAs don’t cover insurance premiums, but they can help with prescriptions, over-the-counter medications, medical equipment and first-aid supplies. They’re also typically offered through employers and don’t roll funds over into the next calendar year. 

Meanwhile, HSAs do cover certain insurance premiums, including long-term care insurance, which covers services when an individual can no longer perform a set number of daily living activities. To open an HSA, you must first enroll in a high-deductible health plan. However, funds roll over from year to year and aren’t tied to a specific employer. Withdrawals are also tax-free when used for qualified medical expenses. Because HSAs allow you to grow funds, they may be more suitable for memory care services.

Where can you find reimbursement eligibility requirements for your medical spending account?

You can find reimbursement eligibility requirements for medical spending accounts through the IRS. The agency breaks down each account type’s benefits, contribution and distribution limits and qualified medical expenses. However, IRS guidelines can change from year to year, making it crucial to routinely check for updates. You can also review your plan documents or contact your account administrator to clarify whether certain expenses qualify for reimbursement. Make sure an expense is qualified before using account funds to avoid being penalized by the IRS.