Highlights
  • FSAs cover therapy when “medically necessary”, meaning it treats diagnosed conditions like anxiety, depression, or PTSD, not general self-improvement.
  • You can contribute up to $3,300 to your FSA in 2025, and funds typically must be used within the plan year or you’ll lose them.
  • Most individual therapy qualifies, but couples counseling usually doesn’t unless it’s essential for treating one partner’s diagnosed mental health condition.
  • Keep detailed receipts and get a letter of medical necessity from your therapist if required. Many providers accept FSA cards directly for easier payment.

Therapy usually comes with some out-of-pocket costs, regardless of your insurance status. These can range from a $20 copay to paying the entire session cost yourself if you don’t have insurance. No matter where you fall on that continuum, you’re probably hoping to make therapy as affordable as possible, and flexible spending accounts (FSAs) were designed to make healthcare less costly. But can you use your FSA for therapy?

The answer is yes, with an asterisk. Flexible spending accounts (FSAs) and health savings accounts (HSAs) are pre-tax accounts that let you set aside money from your paycheck to pay for medical expenses—essentially giving you a discount on healthcare costs equal to whatever you’d normally pay in taxes on that income.

FSAs are tied to your job and typically have a “use it or lose it” policy each year, while HSAs belong to you personally and roll over indefinitely. Both can be used to pay medical bills, including copays, deductibles, and coinsurances. Below, we break down the nuances of when you can and can’t use these accounts, plus the exact steps to pay for therapy with an FSA or HSA.

Woman looking through paperwork with a pen on her couch

Can You Use Your FSA for Therapy?

Yes, in many cases. FSAs and HSAs cover therapy when it’s deemed “medically necessary”, which essentially means the sessions address mental health symptoms that interfere with your daily life or treat a diagnosed mental health condition like anxiety, depression, or PTSD.

The key distinction: Therapy for clinical treatment is covered, while therapy for general self-improvement typically isn’t.

When Is Therapy Considered “Medically Necessary”?

The term “medically necessary” can feel frustratingly vague, especially when you’re trying to figure out if your FSA will cover your sessions. While each insurance plan has its own definition, most follow these four standards:

  1. Services treat, diagnose, or provide symptom relief for a health condition
  2. Treatment is generally accepted as standard medical care
  3. Services are necessary and appropriate for the health concern
  4. A licensed medical provider performs the services

What This Looks Like in Practice

Typically covered:

  • Therapy for anxiety that interferes with work or relationships
  • Depression treatment following a major life change
  • PTSD counseling after trauma
  • Sessions to manage diagnosed bipolar disorder
  • Couples therapy when one partner has a clinical condition affecting the relationship

Usually not covered:

  • General stress management without clinical symptoms
  • Life coaching or personal development
  • Relationship enhancement without medical necessity
  • Sessions with unlicensed counselors
  • Preventive mental wellness (though some plans are expanding coverage here)

Therapists determine medical necessity during your initial intake meeting. When these standards are met, they can write a “letter of medical necessity” that explains why you’ll benefit from therapy and send that documentation to FSA administrators and insurance providers.

Therapy Services That Qualify for FSA

Most talk therapies delivered by licensed mental health providers qualify for FSAs when tied to a diagnosed condition or deemed medically necessary.

Types of Therapy Usually Covered

Individual therapy: Most one-on-one talk therapy sessions are covered when medically necessary, including cognitive behavioral therapy, dialectical behavior therapy, and psychodynamic therapy.

Psychiatric care: Medication management and psychiatric evaluations are typically covered when medically required.

Group therapy: Group sessions may be covered if necessary, either alone or alongside individual therapy.

Couples/family therapy: Less commonly covered, but can qualify if essential to treating one person’s diagnosed mental health condition.

Online therapy: Research shows online therapy is equally effective as in-person sessions, so most FSAs and HSAs cover both delivery methods.

What Might Not Be Covered

Life coaching, counseling with unlicensed providers, and therapy focused solely on self-improvement or general personal development typically won’t qualify, explains Austin Shortreed, BFA, CRPC, CPC, a certified financial advisor at Amperise Financial, since these services aren’t tied to medical treatment.

Pro tip: Check with your FSA administrator about specific services before starting treatment. Coverage can vary between plans, and it’s better to confirm eligibility upfront than face surprise denials later.

How Much Can You Actually Save?

Using an FSA for therapy typically saves you 15% to 25% or more on costs, depending on your tax bracket. Here’s the simple math:

Example 1: Paying out-of-pocket for therapy

  • Therapy costs: $1,800 per year
  • Your tax rate: 24% (federal + state)
  • You pay $1,800 with after-tax dollars

Example 2: Using your FSA for therapy

  • Therapy costs: $1,800 per year
  • FSA contribution: $1,800 (pre-tax)
  • Tax savings: approximately $430 (24% of $1,800)
  • Your actual out-of-pocket cost: $1,370

If you have insurance: FSAs can’t pay your monthly premiums, but they cover deductibles, copays, and coinsurances. A $30 copay per session becomes roughly $23 to $25 when paid with FSA dollars, depending on your tax rate. For 12 sessions, that translates to about $75 in savings.

To maximize your FSA benefits, plan ahead. Most FSA funds don’t roll over year to year, so budget your therapy costs to avoid losing unused money, explains Michelle Panayotov, head of revenue cycle management at Thriveworks.

How to Use Your FSA for Therapy

Here’s how to tap into your FSA for therapy in three straightforward steps, according to Shortreed:

Step 1: Verify Coverage and Acceptance

  • Contact your FSA plan administrator to confirm what they consider medically necessary
  • Ask your therapist if they accept FSA cards or can provide proper documentation for reimbursement
  • Confirm the therapist is licensed and can write letters of medical necessity

Step 2: Keep Detailed Records

Most FSA administrators require itemized receipts from each session, not summary statements. Save every receipt and document throughout treatment.

Step 3: Submit Claims or Use Your FSA Card

If your provider accepts FSA cards, you can pay directly with your FSA debit card at the time of service. If they don’t accept FSA cards, you’ll pay with your personal funds and then submit receipts to your FSA administrator for reimbursement, Shortreed explains.

Some therapy providers like Thriveworks streamline this process by accepting FSA cards directly and helping with documentation.

What to Ask Your Therapist About FSA Coverage

Financial considerations shouldn’t add stress to your therapy journey. Knowing whether a therapist accepts your FSA and understanding their billing process helps you focus on healing rather than worrying about costs.

Essential questions to ask:

  • Do you accept FSA cards directly?
  • Can you provide documentation required for FSA reimbursement?
  • Will you write a letter of medical necessity if needed?
  • What information do you need from me to complete FSA paperwork?
  • How do you handle FSA claim denials or appeals?

Required Documentation (with Examples)

Letter of Medical Necessity

Your therapist will write this letter to demonstrate why treatment is medically necessary. Here’s what it typically includes:

Date: [current date]

To whom it may concern:

I have been treating [patient name] since [start date]. This letter describes my clinical assessment and the medically necessary treatment for [patient name].

I am a licensed [credential] with [X] years of experience treating [relevant conditions]. I maintain a private practice specializing in [relevant areas].

Clinical assessment:
Based on clinical interviews and standardized assessments, [patient name] presents with [diagnosis/symptoms] that significantly impairs their [work/relationships/daily functioning]. This assessment is consistent with DSM-5 criteria for [relevant diagnosis] and established clinical guidelines.

Treatment plan:
I recommend [type of therapy] sessions [frequency] to address [specific symptoms/goals]. This evidence-based approach is medically necessary to prevent deterioration and improve functional capacity. Without treatment, [patient name] is at risk for [relevant clinical risks].

Sincerely,
[Signature]
[Printed name, credentials]
[License number]

Itemized Receipts

FSA administrators typically require receipts that clearly show:

  • Provider name and credentials
  • Date of service
  • Amount charged
  • Description of service (e.g., “Individual Psychotherapy Session”)
  • Your name as the patient

“FSA plans require that you retain all receipts for up to two years,” Panayotov says. “If you misplace a receipt from Thriveworks, you can call customer service to request an itemized copy.”

Frequently Asked Questions

How much can I contribute to my FSA for therapy?

For 2025, you can contribute up to $3,300 to an FSA (this limit increases slightly each year). Plan your contribution based on expected therapy costs, insurance copays, and other medical expenses.

What if I don’t have a formal diagnosis yet?

Contact your insurance provider to understand their medical necessity standards, then discuss with your therapist whether they can provide a diagnosis or refer you to someone who can. Many therapists can assess and diagnose during initial sessions.

Can I get reimbursed for sessions I already paid for?

Yes, it’s possible to get retroactive reimbursement. Your therapist would need to submit a retrospective letter of medical necessity describing their assessment and treatment. The FSA administrator will then approve or deny the claim.

What if my FSA gets denied?

FSA administrators must provide a reason for denials. Your provider can appeal the decision by submitting additional documentation or clarifying medical necessity. Don’t give up after the first denial—many appeals succeed with proper documentation.

The Bottom Line

FSAs and HSAs offer significant savings on therapy costs—typically 15% to 25% or more depending on your tax bracket—when sessions meet medical necessity standards. The key is working with a licensed therapist who understands these requirements and can provide proper documentation.

To maximize your benefits, verify coverage before starting treatment, keep detailed records, and choose providers experienced with FSA processes. Companies like Thriveworks accept FSA cards directly and handle much of the paperwork, making it easier to focus on your mental health rather than administrative hurdles.

Remember: seeking therapy is an investment in your wellbeing, and FSAs are designed to make that investment more affordable. Don’t let financial concerns prevent you from getting the support you deserve.