Mental health is an essential aspect of our well-being, and many individuals are exploring innovative treatment options to address their mental health concerns. One such emerging treatment option is psychedelic therapy, which has been showing promising results in recent years.¹

In this blog post, we will discuss how you can use your Flexible Spending Account (FSA) or Health Savings Account (HSA) to pay for psychedelic and other mental health care treatments.

What are FSA and HSA Accounts?

Flexible Spending Accounts (FSA) and Health Savings Accounts (HSA) are tax-advantaged accounts designed to help individuals save for eligible medical expenses. Both FSA and HSA contributions are made pre-tax, which means that they can reduce your taxable income and save you money on taxes.²

• FSA: Offered by employers, FSAs allow employees to set aside a portion of their pre-tax earnings to pay for eligible medical expenses. However, FSA funds are generally subject to the "use-it-or-lose-it" rule, meaning that any unused funds by the end of the plan year (or grace period, if applicable) will be forfeited.²
• HSA: HSAs are available to individuals enrolled in a high-deductible health plan (HDHP). These accounts have higher annual contribution limits than FSAs and can be rolled over from year to year without losing any unused funds.²

Using FSA/HSA for Mental Health Care Treatments

Both FSA and HSA funds can be used to pay for a variety of mental health care treatments, including therapy, counseling, and psychiatric care. However, it's essential to understand the specific requirements and limitations of these accounts to ensure you're using your funds appropriately.

1. Verify eligibility: Before using your FSA or HSA funds for mental health care treatments, it's crucial to confirm that the treatments are considered eligible medical expenses under IRS guidelines. You can find a comprehensive list of eligible expenses in IRS Publication 502.²
2. Obtain a prescription or Letter of Medical Necessity (LMN): Some treatments, like therapy and counseling, may require a prescription or LMN from your healthcare provider to be eligible for FSA or HSA reimbursement. Be sure to consult your healthcare provider to obtain the necessary documentation.

Psychedelic Therapy and FSA/HSA

Currently, the use of certain psychedelic substances like psilocybin (magic mushrooms) and MDMA (ecstasy) is still illegal under federal law in the United States, and they are classified as Schedule I substances.³ However, research into the therapeutic potential of these substances has been gaining momentum.⁴ Ketamine treatment is legal in the US, however, and under certain circumstances components of the treatment such as the medical visit with a physician and integration with a licensed professional (e.g., PsyD, LCSW, LMFT, LPC) may be payable with FSA or HSA reimbursement. You should verify with your benefits provider before attempting to use your FSA or HSA for reimbursement, particularly if you are using an FSA or HSA debit card.

Conclusion

Mental health care is an essential component of overall well-being, and using your FSA or HSA funds can help make these treatments more affordable. While psychedelic therapy is not currently eligible for FSA/HSA reimbursement, it's essential to stay informed about changes in eligibility as research and legislation evolve.

Further Reading:

For more information on the therapeutic potential of psychedelics, consider exploring resources from organizations such as the Multidisciplinary Association for Psychedelic Studies (MAPS) at https://www.maps.org/ or the Usona Institute at https://www.usonainstitute.org/. Both organizations are actively involved in researching and advocating for the responsible use of psychedelic substances in mental health care. Stay informed about changes in the eligibility of these treatments for FSA/HSA reimbursement by following updates from the IRS, your employer, or your health plan provider.

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References/Resources:

1. Pollan, M. (2019). How to Change Your Mind: What the New Science of Psychedelics Teaches Us About Consciousness, Dying, Addiction, Depression, and Transcendence. Penguin.
2. Publication 502 (2022), Medical and Dental Expenses | Internal Revenue Service. (n.d.). https://www.irs.gov/publications/p502
3. Drug Scheduling. (n.d.). DEA. https://www.dea.gov/drug-information/drug-scheduling
4. Mithoefer, M. C., Wagner, M. C., Mithoefer, A. T., Jerome, L., & Doblin, R. (2011). The safety and efficacy of ±3,4-methylenedioxymethamphetamine-assisted psychotherapy in subjects with chronic, treatment-resistant posttraumatic stress disorder: the first randomized controlled pilot study. Journal of Psychopharmacology, 25(4), 439–452. https://doi.org/10.1177/0269881110378371

Cover photo by Towfiqu barbhuiya on Unsplash