Using your FSA or HSA for pregnancy and baby things
Having a baby is expensive. Like REALLY expensive. Unfortunately, there aren’t a ton of “hacks” out there to magically make the cost more manageable. However, if you have an FSA (Flexible Spending Account) or an HSA (Health Savings Account) that is one way to reduce the out-of-pocket cost for various medical or medically adjacent pregnancy and baby expenses.
What is an FSA/HSA?
FSAs (Flexible Spending Accounts) and HSAs (Health Savings Accounts) are accounts that help you save for future medical expenses. Because the money that you put into these accounts is considered “pre-tax”, when you spend it on eligible medical expenses, your money stretches further than if you just paid for it with your normal “after-tax” income.
What does it mean to spend “pre-tax” money?
When you get paid from your job, you don’t actually get to keep all of the money that you earn. A portion of the money earned is withheld for taxes. Let’s say you earn $50/hour at your job and have a $100 co-pay to see a specialist doctor. Because a portion of your income is funneled off to pay your income taxes, you will have to work approximately 2.5 hours to earn enough to pay for your $100 item. However, if you can use “pretax” money to pay for the $100 co-pay, you don’t pay any taxes on that income, so it only takes you 2 hours to earn enough to pay for it.
When you spend pre-tax dollars, your money stretches further. So if you are anticipating higher-than-average medical expenses in the coming year, increasing your FSA/HSA contributions will allow you to pay for more of those expenses with pre-tax money.
What expenses are eligible?
Medical expenses that are not covered by your insurance are generally eligible. This includes expenses paid towards your deductible, co-pays, or fees for out-of-network providers.
You can also use your FSA/HSA money to purchase medical equipment, many baby care essentials, first aid supplies, and various over-the-counter medications. Your FSA/HSA provider will have an extensive list of items and services that are covered. Note that some expenses are always covered, some are never covered, and some are covered in certain situations (like if you have a note from your doctor saying this item or service is medically necessary).
The FSA Store has an extensive eligibility list, and you can even order many of the items directly from their website (but you don’t have to order them through that website for them to be eligible).
At most major pharmacy chains, your receipt will indicate any items that are FSA/HSA eligible. Similarly, Amazon also indicates items that are FSA/HSA eligible.
Pre-Pregnancy FSA Eligible Items
Even before you get pregnant, you may incur some expenses along the journey to getting pregnant. If you are planning to start trying for a baby, or are actively trying to conceive, you might have some FSA/HSA-eligible expenses already.
Prenatal vitamins
Pregnancy tests
Ovulation tests
Fertility treatment (IVF, IUI, etc)
Medication-related to fertility treatment
Temporary egg storage
Pregnancy FSA Eligible Items
The expensive part of having a baby comes once the baby is actually born. However, there are still quite a few new expenses that come during pregnancy. While pregnancy costs like maternity clothes aren’t FSA eligible, there are quite a few expenses that are:
Prenatal vitamins
Anti-nausea medication and anti-nausea armbands
Maternity support belt
Body pillow
Medical co-pays
Genetic screening (if not covered by insurance)
Birth Doula
Childbirth education classes
Postpartum Care (for Mom) FSA Eligible Items
When you envision caring for your new baby, most of us aren’t thinking about all the care that a new mom’s body will need. Recovering from childbirth is no joke, having some of these items on hand ahead of time can help take the edge off of the recovery process.
Pads/postpartum disposable underwear
Peri bottle
Belly support band
Tucks medicated cooling pads
Stool softener
Tylenol/Ibuprofen
Mental health therapy (for individuals, not couples therapy)
Nursing/Pumping FSA Eligible Supplies
While some people say “breastfeeding is free”, you will likely have some breastfeeding-related expenses, especially if you will be pumping milk for your baby.
Pump (electric, manual, hakka, etc)
Milk Storage bags
Nursing pads
Nipple cream
Nipple shield
FSA Eligible Baby Items
Thermometer
Aquaphor
Infant Tylenol
Saline nasal spray
Nasal aspirator
Diaper rash ointment
Gas relief supplements
Sunscreen
Band-aids
Items That Are NOT eligible
Diapers
Wipes
Baby bottles
Baby formula (except in rare situations where the baby is prescribed a specific formula by a doctor)
Clothing
Nursing bras
Crib/bassinet
Teethers
Determining how much to contribute to an FSA/HSA
If you have access to an FSA (through your employer) you can contribute up to $3,200 for the year, as of 2024. If your partner also has access to an FSA, they can contribute up to that amount as well. For an HSA in 2024, an individual can contribute up to $4,150, or a family can contribute up to $8,300.
With an FSA, in particular, there is a risk of overcontributing. If you contribute $3,000 for the year, but only end up having $1,000 in eligible expenses, you may lose out on the other $2,000 you contributed. Some employers have an extension period, meaning that a portion of your surplus contributions can still be used within the first few months of the following year. However, you want to be mindful to not contribute more to an FSA than you will actually need.
Because there is a risk of contributing more than you need, it’s worth spending a little time trying to find that sweet spot where you can take advantage of the potential cost savings, but not risk losing money that goes unused.
If you are already pregnant, it may be a bit easier to anticipate your likely expenses. If you are trying to conceive or plan to start trying later in the year, it becomes a bit harder to map out how many of these expenses will actually happen before the end of the year.
Understanding what your health insurance covers (and what you should expect to pay out of pocket) is a good first step to anticipating your upcoming medical costs. If you have a high deductible, you can assume you will have higher out-of-pocket expenses, so a higher FSA/HSA contribution may make sense. Alternatively, if your health insurance covers nearly all of your prenatal and delivery expenses, there are a lot fewer expenses you’ll be paying for, so you might not want to max out your potential contributions.
Next, you can go through the above list to identify which additional expenses you envision needing and jot down a rough cost estimate. Adding the expended out-of-pocket medical expenses to a rough list of additional eligible expenses will give you a ballpark of how much you are likely to spend, and how much it may make sense to contribute to your FSA/HSA.
If you are trying to conceive, or just aren’t sure if you will actually have pregnancy/baby-related expenses this year (having a baby doesn’t always go according to our planned timeline), it can be helpful to also map out what FSA-eligible items you would still have in that scenario.
Keep in mind, that there are plenty of non-pregnancy/baby-related ways to spend FSA funds. You can include all your other out-of-pocket medical expenses, first aid supplies, prescriptions, feminine hygiene products, etc, in your anticipated total FSA eligible spend.
Also, if you and your spouse are married and file taxes jointly, you can use for FSA/HSA funds for your spouse or any other dependents in your household.
Can I change my contribution amount?
With an FSA, you can only change your contribution amount during open enrollment, unless you have a qualifying life event. If you are currently pregnant, and annoyed that you will have to wait until open enrollment to start taking advantage of all this potential pre-tax spending, the good news is that having a baby is a “qualifying life event”. So once your baby is born, you can change your FSA election for the remainder of the year. You won’t be able to claim all of the pregnancy-related expenses you already had, but you can claim all the new baby/postpartum care expenses going forward.
With an HSA you can change your elections at any time during the year.
Using your FSA or HSA to purchase eligible items with pre-tax money is a good way to save a little money. However, this cost-saving strategy won’t drastically reduce the cost of having a baby.
Having a baby can be a catalyst for getting your financial life in order. As the costs ramp up, the pressure to make the most savvy financial decisions also ramps up. Having a baby can also prompt you to re-evaluate your priorities, which naturally changes how you approach money.
Sarah Roller is a financial coach who helps new parents navigate the financial transition to parenthood.
Learn more about Sarah and how she works with parents to reduce financial stress.
