It is worth having a Healthcare Flexible Spending Account (FSA) during pregnancy because your prenatal care, childbirth, and newborn baby generate an ongoing stream of eligible tax saving spending!

Expectant parents can reduce their tax obligation by $1,600 or more (depending on their income and level of unreimbursed medical expenses in the plan year).

The pending birth on your infant provides an opportunity to maximize benefits while minimizing any drawbacks – the risk of leaving unused money on the table – the issue that scares many people away.

Learn how to take advantage. Give yourself an easy pay raise!

Flexible Spending Account During Pregnancy

A Healthcare Flexible Spending Account is worth having during pregnancy because the benefits outweigh the drawbacks and parents-to-be have an uncommon fudge factor tipping the scales even further.

  • Pros: Pregnant women often incur a large sum of qualifying expenses
  • Cons: It makes sense to contribute only the predictable amounts
  • Fudge factor: the birth of a newborn permits mid-year adjustments (additions)

How Much to Put In

How much money should you contribute to a Healthcare FSA when mom is pregnant? Several factors determine the optimal amount to put in during your annual open enrollment.

  • Estimate your predictable maternity-related expenses
    • Prenatal care
    • Delivery and childbirth
  • Do not contribute amounts for possible surprise bills
    • Use it or lose it rules can apply
    • You can roll over only $500 into the next year
    • The birth of your child allows for mid-year changes (see below)
  • A husband and wife can both contribute up to $2,650 as of 2018

Prenatal Care

Contribute predictable prenatal care expenses into your Healthcare FSA during open enrollment. Putting in only the certain amounts avoids having to forfeit unused funds at the end of the year.

These common prenatal costs are usually eligible.

Delivery and Childbirth

Childbirth charges also qualify for Healthcare FSA reimbursement. However, labor and delivery often result in a wide array of unreimbursed hospital bills. Therefore, it is important to distinguish between predictable and surprise charges.

Predictable childbirth expenses occur during a normal labor and delivery experience. Consult your insurance plan for details on the cost-sharing features of your plan.

Surprise childbirth expenses happen during complicated labor and delivery, or when your infant requires specialized care in a Neonatal Intensive Care Unit (NICU). The leftover bills are often large.

  • Second hospital deductible for infant
  • Ongoing coinsurance and copayments
  • Out-of-Network charges for specialists

Flexible Spending Account for Newborn Baby

A Healthcare Flexible Spending Account is worth having after bringing home a newborn baby due to the second set of predictable eligible expenses, and the opportunity to utilize the built-in fudge factor to address surprises: mid-year adjustments to the contribution amount.

Now is the opportunity to maximize the husband and wife combined contribution limit (if available at both employers). Married couples max out at $5,300 in total each year. A couple in the 24% tax bracket can lower their tax bill by $1,667 or more.

  • Federal income taxes at 24%: $1,272
  • FICA taxes at 7.65%: $405
  • State income taxes: varies

Mid-Year Changes

Parents can make mid-year contribution changes to their Healthcare FSA after the birth of a newborn baby. An increase in the number of dependents is a qualifying life event. A qualifying life event allows participants to make election changes outside of the annual open enrollment period.

Keep this mid-year change option in mind should you encounter any of the surprise charges during childbirth (see above) – especially if your newborn begins his or her life on an incubator in the NICU.

Make sure to set up a Dependent Care FSA if you plan to use daycare in order to return to work. You can start this benefit program at the same time.

Baby Health

Medical care for your infant make up the most important Healthcare FSA covered expenses. A healthy newborn does not require extensive care from a doctor. However, many parents must cope with ongoing charges.

Make the appropriate mid-year adjustments to your contribution level if dealing with a sick child, or one born with developmental disabilities.

Umbilical cord blood banking costs are covered when used in the treatment of a medical condition. Your plan administrator may deny any claims for cord blood banking when done for future use.

Baby Items

Many different baby items are Healthcare FSA covered expenses – but not all. In general, the products must qualify as medical deductions under IRS rules. Below is our interpretation of which commonly requested items your plan administrator will approve.

  • Baby diapers are typically ineligible unless needed to alleviate symptoms associated with a named disease or medical condition. Your doctor will need to provide a note describing the specific condition.
  • Baby formula is usually ineligible because it primarily supports nutrition. Infants with allergies or medical conditions requiring a specialized formula may fit the criteria. However, the administrator may first deduct the cost of a regular infant formula.
  • Basic baby bottles to dispense infant formula temporarily are ineligible. However, bottles or bags designed to store breast milk do qualify because of the noted health benefits.
  • Breast pumps and accessories such as bottles, batteries, vehicle adapters, shields, cleaners, and sanitizers qualify for reimbursement.


IRS Publication 502