Can You Use FSA or HSA Funds to Purchase Refurbished Medical Equipment?

As healthcare costs continue to increase, many patients, caregivers, and families are looking for ways to reduce out-of-pocket expenses without compromising on quality or safety. One common question we receive at Outfront Medical is whether Flexible Spending Accounts (FSAs) or Health Savings Accounts (HSAs) can be used to purchase refurbished medical equipment.

The short answer is yes — in many cases, but understanding how these accounts work is key to avoiding reimbursement issues.

What Is a Flexible Spending Account (FSA)?

A Flexible Spending Account (FSA) is an employer-sponsored benefit that allows employees to set aside a portion of their paycheck before taxes to pay for qualified medical expenses.

How an FSA Works

FSAs are funded through payroll deductions, meaning contributions are made automatically from your paycheck throughout the year. These funds can then be used to pay for eligible medical expenses for you, your spouse, or your dependents.

One important feature of an FSA is that the entire annual contribution is available at the beginning of the plan year, even if you haven’t yet contributed the full amount.

FSA Rules and Limitations

While FSAs offer valuable tax savings, they come with several restrictions:

• Use-it-or-lose-it rule: Most FSAs require funds to be used within the plan year. Some plans offer a short grace period or allow a limited rollover.
• Employer ownership: The account is tied to your employer, not the individual.
• Strict documentation requirements: Many FSA administrators closely review claims and may request additional paperwork.

Using an FSA for Medical Equipment

FSAs commonly cover durable medical equipment (DME) when it is:

• Used to diagnose, treat, or manage a medical condition
• Prescribed by a licensed healthcare provider
• Not for general wellness or convenience

For higher-cost items such as CPAP machines, oxygen concentrators, ventilators, or patient monitors, FSAs often require a prescription or Letter of Medical Necessity (LMN). Without this documentation, reimbursement may be denied—even if the item itself is eligible.

What Is a Health Savings Account (HSA)?

A Health Savings Account (HSA) is a personal medical savings account available to individuals enrolled in a High-Deductible Health Plan (HDHP).

How an HSA Works

HSAs are owned by the individual, not the employer. Contributions can be made by the employee, employer, or both, and all contributions are tax-deductible or pre-tax.

Unlike FSAs, HSA funds never expire and remain with the account holder even if they change jobs or retire.

Unique Advantages of an HSA

HSAs are often viewed as one of the most flexible healthcare savings tools available:

• Funds roll over year after year
• The account earns interest and can be invested
• Withdrawals for qualified medical expenses are tax-free
• Funds can be used well into retirement for healthcare costs

Using an HSA for Medical Equipment

HSAs follow the same IRS definition of qualified medical expenses, but typically with less administrative oversight than FSAs. Refurbished medical equipment may be purchased using HSA funds when:

• The equipment is medically necessary
• It is FDA-cleared
• It is used for personal medical care (not resale or business use)

While HSAs may not always require upfront documentation, it is still strongly recommended to keep:

• A prescription or LMN
• Itemized receipts
• Proof of medical necessity

These records may be needed if the IRS ever audits the account.

Are Refurbished Medical Devices Eligible?

Refurbished medical equipment is generally eligible for both FSA and HSA use, provided it meets IRS requirements.

What Qualifies as Refurbished?

Refurbished equipment is not the same as “used” or “as-is” equipment. Professionally refurbished devices are:

• Thoroughly inspected
• Cleaned and tested
• Restored to proper working condition
• Verified for performance and safety

Common Eligible Refurbished Equipment

Examples include:

• CPAP and BiPAP machines
• Oxygen concentrators
• Ventilators
• Patient monitors
• Defibrillators for home medical use

Eligibility depends on medical necessity, not whether the device is new or refurbished.

Why Choose Refurbished Medical Equipment?

Refurbished medical equipment offers significant benefits:

• Lower cost compared to new devices
• Reliable performance when properly refurbished
• Greater accessibility for patients facing insurance gaps or high deductibles

When combined with FSA or HSA funds, refurbished equipment can dramatically reduce out-of-pocket expenses while still meeting clinical needs.

Documentation Is Critical

To help ensure approval or reimbursement:

• Obtain a prescription or LMN when required
• Purchase from a reputable medical equipment provider
• Keep all invoices and receipts
• Confirm the equipment is for personal medical use

How Outfront Medical Supports FSA and HSA Purchases

At Outfront Medical, we specialize in professionally refurbished medical equipment for both home and clinical use. Our team provides:

• Detailed itemized invoices
• Equipment descriptions suitable for FSA/HSA submission
• Guidance on documentation requirements
• Trusted refurbished devices at competitive pricing

If you are considering using FSA or HSA funds for refurbished medical equipment and have questions about eligibility, our team is here to help.