The debate over medical cannabis is often framed in political terms. But there is a lot more to the issue than politics. There are also plenty of practical things to consider. For example, assuming your state has legalized medical cannabis, can you charge cannabis treatments to your flexible spending account (FSA)?
As things currently stand, the answer is a resounding ‘no’. That could switch to ‘maybe’ should the DOJ move to transition cannabis to Schedule III of the Controlled Substances Act. But rescheduling is far from guaranteed. So for right now, medical cannabis is off limits for FSA accounts.
Saving for Medical Expenses
An FSA is a type of savings account into which consumers deposit pre-tax dollars that can be used to pay for future medical expenses. The FSA is only available through an employer-sponsored benefit plan or a special arrangement for self-employed individuals. You cannot just go set up an FSA on your own.
Because FSAs are considered ancillary employee benefits, employers are allowed to determine what types of medical bills an account will cover. Quite frankly, just about anything that is not considered controversial is eligible for FSA spending. People use their accounts to pay for:
- Prescription medications
- Treatments from specialists
- Medical devices and equipment
- Diagnostic testing
- Eyeglasses and hearing aids
- Dental work and cleanings
Some employers are generous enough to cover alternative treatments like acupuncture, chiropractic, and regenerative medicine. But nearly all employers draw the line at medical cannabis.
It’s a Federal Law Thing
Current restrictions on using FSA funds to pay for medical cannabis rest in federal law. Cannabis has been a Schedule I controlled substance since the 1970s. That means it is fully and totally illegal at the federal level. Even though more than three-dozen states have decriminalized marijuana to some extent, federal law has not changed.
Employers cannot legally allow medical cannabis charges to FSA accounts even if they want to. I am sure some do with the understanding that Washington has chosen to not prosecute cannabis crimes. But by and large, employers tend to stay away from cannabis entirely.
Should cannabis be moved to Schedule III, it is likely employers would still be reluctant to include medical cannabis treatments for FSA payment. Why? Because there is no easy way for them to distinguish between medical and recreational consumption. If someone charged recreational cannabis to an FSA account and was caught, there could be issues for the employer’s well.
Insurance Doesn’t Cover It Either
Not being able to charge medical cannabis to an FSA account creates a sticky situation on its own. Making matters worse is that health insurance does not cover it either. Insurance companies are in the same boat as employers and FSA account managers.
According to the operators of the Beehive Farmacy in Salt Lake City, UT, medical cannabis patients are left to pay for their medications out of pocket. For some of them, the monthly costs are quite expensive. But that is where we stand right now.
Things could change with federal rescheduling. However, any favorable changes in terms of insurance coverage and cost would likely still be years away. Successfully rescheduling cannabis would set in motion a year’s-long process of trying to iron out all the details so that cannabis could be regulated like any other prescription medication.
For now, you cannot use FSA funds to pay for medical cannabis. You may never be allowed to do so. The best we can hope for at this point is for Washington and the states to come to some kind of agreement that allows the industry to move forward.
