Continuous Positive Airway Pressure (CPAP) therapy is a common treatment for obstructive sleep apnea. A Flexible Spending Account (FSA) allows employees to set aside pre-tax money to pay for qualified medical expenses not covered by insurance. CPAP equipment and necessary ongoing supplies are generally considered eligible medical expenses. This eligibility is based on the device’s function in treating a recognized medical condition, allowing you to use your tax-advantaged funds.
The Rule of Medical Necessity and Prescription Requirements
FSA eligibility is determined by “medical necessity,” defined by the IRS as expenses paid primarily for the diagnosis, cure, mitigation, treatment, or prevention of disease. CPAP therapy falls under this definition because it treats sleep apnea, a diagnosed medical disorder. The equipment is classified as a medical device intended to affect the function of the body by maintaining an open airway during sleep.
To validate this medical necessity for FSA purposes, nearly all CPAP-related expenses require a prescription from a licensed healthcare provider. This prescription serves as the official documentation proving that the equipment is being used to treat a specific medical condition. The process often begins with a sleep study that diagnoses the severity of the apnea, which then justifies the prescription for the CPAP machine. Even replacement parts and ongoing supplies are often required to be covered by the initial prescription or a renewed one.
Eligible CPAP Machines and Ongoing Supplies
The eligibility for CPAP purchases extends to both the initial equipment and the recurring items necessary to maintain effective therapy. The primary device, whether it is a standard CPAP machine, a BiPAP (Bilevel Positive Airway Pressure) machine, or an auto-adjusting APAP machine, is an eligible expense. This includes the cost of purchasing the machine outright or the fees associated with renting the device. For these larger equipment purchases, some FSA administrators may require a Letter of Medical Necessity (LMN) from a physician, in addition to the prescription.
The continuous nature of CPAP treatment requires regular replacement of various components, which are also eligible for FSA reimbursement. These necessary consumable supplies include:
- The mask assembly, including the cushion, nasal pillows, or full-face mask, which must be replaced frequently to ensure a proper seal and hygiene.
- Headgear, the straps that hold the mask in place, which are eligible replacements as they wear out over time.
- Tubing or hoses that connect the machine to the mask.
- Replacement air filters (disposable and reusable types) that prevent dust and allergens from entering the airway.
- Water chambers or reservoirs for heated humidifiers, as they are integral to the function of the device.
It is important to distinguish these items from general household goods that might seem related but are not eligible. For example, general-purpose cleaning wipes or sprays are typically not covered, but CPAP-specific cleaning solutions and wipes designed for medical device sanitation are often eligible. Comfort items, such as specialized pillows not specifically prescribed to facilitate CPAP use, are generally excluded from FSA coverage. This distinction is based on whether the item primarily treats the medical condition or merely offers a convenience.
Navigating FSA Reimbursement and Documentation
Once an expense has been incurred, the next step is navigating the reimbursement process, which hinges on proper documentation. The three primary documents required for a successful claim are a detailed receipt, proof of the prescription, and, if applicable, the Explanation of Benefits (EOB). The detailed receipt or invoice must clearly show the date of purchase, a description of the item, and the total cost.
The proof of prescription, which validates the medical necessity of the CPAP item, should be kept on file for all machine and supply purchases. If the purchase was initially covered by a health insurance plan, the EOB is needed to demonstrate any remaining out-of-pocket costs that are eligible for FSA reimbursement. These documents ensure that the claim meets both the plan administrator’s requirements and IRS guidelines.
Many FSA plans provide a dedicated debit card that can be used directly at merchants, automatically approving the expense at the point of sale. If a debit card is not available or the purchase is made with a personal credit card, a manual claim must be submitted to the FSA administrator. It is also crucial to remember the “use it or lose it” rule, where funds must be spent by the plan’s deadline to avoid forfeiting the money. This deadline may include a short grace period or a limited carryover amount.