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Flexing Your Flex Account (Carrie Coolidge 11.17.06, Forbes)

Most people know the pre-tax payroll contributions they have made over the year to a flexible spending account are used to pay for medical expenses not covered by insurance. These accounts offer great tax benefits by reimbursing plan participants for out of pocket expenses ranging from insurance deductibles and doctor co-payments to medications.

Many participants, however, don't realize that flex spend accounts can also be used to pay for medical services that don't require prior physician approval or that may not be covered by their company health plan. Indeed, flex spend accounts can be used to pay for a wide range of things including laser eye surgery, dental expenses, acupuncture, speech therapy, psychiatric care, vision expenses (including prescription eyeglasses), vaccinations and immunizations and dermatology services (as long as they aren't for cosmetic purposes). Lesser known reimbursable expenses include learning fees to special schools for a child with severe learning disabilities, transportation costs incurred to get medical treatment and, for the vision-impaired, Braille books and magazines as well as guide dogs.

And that's not all. In 2003, the Treasury Department and the Internal Revenue Service announced that certain over-the-counter drugs could be paid for with flexible spending account money. OTC products are reimbursable if they are used to alleviate or treat personal injuries or sickness and are generally accepted as falling within the category of medicine or drugs. Over-the-counter drugs that are now eligible include such products as Johnson & Johnson's Tylenol, aspirin and cough and flu medications. Even allergy and sinus drugs, such as Claritin, which is manufactured by Schering-Plough, can be reimbursed through a flex spend account. Dietary supplements, including vitamins, minerals, herbals and botanicals, are covered when used to treat a current illness but not when used for general health purposes.

Drugstore.com, an online health and beauty retailer, called upon some of the largest U.S. benefits administrators to create a list of items that are eligible for reimbursement under most plans. On its Web site, Drugstore.com offers some 2,000 OTC items deemed likely to be eligible at its "FSA Store."