Health Savings Account (HSA) vs Flexible Spending Account (FSA)
The verdict
For funding an OTC CGM, the Health Savings Account (HSA) is the superior choice for most people who are eligible. Its indefinite rollover, higher contribution limits, portability, and investment potential make it a powerful tool for managing a recurring health expense like a continuous glucose monitor.
An OTC continuous glucose monitor like Dexcom Stelo costs $1,068 a year. For W2 employees and self-employed individuals using an HDHP, that's a significant recurring expense. The good news is the CARES Act made these devices eligible for tax-advantaged accounts, but the rules for HSAs and FSAs differ. Understanding otc cgm hsa fsa eligibility can save you 20-30% on your annual cost and prevent reimbursement headaches. This guide breaks down which account works better for funding your OTC CGM in 2026, based on real contribution limits and plan specifics.
Health Savings Account (HSA)
A Health Savings Account is a tax-advantaged savings account you own, available only if you have a qualifying High Deductible Health Plan (HDHP). Funds roll over year after year, can be invested, and are portable. For 2026, contribution limits are $4,400 for self-only and $8,750 for family coverage.
Flexible Spending Account (FSA)
A Flexible Spending Account is an employer-sponsored account that lets you set aside pre-tax dollars for medical expenses. You must elect a contribution amount during open enrollment, and funds are generally forfeited if not used by year-end, though a $680 carryover is allowed if the plan permits.
| Feature | Health Savings Account (HSA) | Flexible Spending Account (FSA) |
|---|---|---|
| 2026 Contribution Limit | $4,300 (self) / $8,550 (family)Winner | $3,400 (per employee) |
| Fund Rollover / Carryover | Indefinite rolloverWinner | Up to $680 (if plan allows) |
| Account Portability | You own it, keep it if you change jobsWinner | Typically tied to your employer |
| Investment Potential | Funds can be invested once balance thresholds are metWinner | Funds cannot be invested |
| Eligibility for OTC CGM | Eligible (CARES Act)Tie | Eligible (CARES Act)Tie |
| Tax Savings on $1,068 CGM Cost | 20-30% ($214-$320)Tie | 20-30% ($214-$320)Tie |
| Prescription / LMN Required | NoTie | NoTie |
| Funding Flexibility | Can contribute or adjust anytime (within limits)Winner | Must set election during open enrollment, changes limited |
| Triple Tax Advantage | Contributions, growth, and withdrawals are tax-free for qualified expensesWinner | Contributions and withdrawals are tax-free; no growth |
| Ideal for Recurring Subscription | Excellent (funds persist)Winner | Risky (funds may expire) |
Our Verdict
For funding an OTC CGM, the Health Savings Account (HSA) is the superior choice for most people who are eligible. Its indefinite rollover, higher contribution limits, portability, and investment potential make it a powerful tool for managing a recurring health expense like a continuous glucose monitor.
Best for: Health Savings Account (HSA)
- Individuals with a qualifying HDHP planning to use an OTC CGM long-term.
- Those who want to invest healthcare savings for future expenses or retirement.
- People who anticipate changing employers and need account portability.
- Families needing the higher $8,550 contribution limit for multiple health expenses.
Best for: Flexible Spending Account (FSA)
- Employees with a predictable FSA plan and a stable, known CGM cost for the year.
- Those without an HDHP who only have access to an FSA through their employer.
- Individuals who can accurately estimate medical expenses and will use the full FSA balance.
Pro Tips
- If your FSA has a grace period or carryover, time your OTC CGM purchase for late in the plan year to use up expiring funds while preserving current-year funds for other expenses.
- Set up your OTC CGM subscription on a quarterly or annual plan (like Stelo's 3-month autoship) and use your HSA to pay. This locks in a lower per-month rate and simplifies receipt tracking for one large, annual qualified expense.
- Even though no prescription is needed, keep a note in your records explaining your medical reason for using the CGM (e.g., 'monitoring for prediabetes'). This creates a paper trail in case of an IRS audit.
- Before choosing, check if your specific FSA plan includes a 'limited-purpose' restriction that only covers vision and dental. These plans are not compatible with OTC CGM purchases.
Frequently Asked Questions
Are over-the-counter CGMs like Dexcom Stelo really FSA and HSA eligible without a prescription?
Yes. The CARES Act of 2020 permanently expanded the definition of qualified medical expenses to include over-the-counter medications and medical devices purchased without a prescription. This includes OTC CGMs. However, final approval depends on your specific FSA or HSA plan administrator, so you should verify with them. Always keep your receipt for reimbursement or audit purposes.
What's the difference between using an HSA and an FSA for an OTC CGM?
The main differences are ownership and rollover rules. An HSA is your account, stays with you if you change jobs, and funds roll over indefinitely. An FSA is typically owned by your employer, and you usually lose unspent funds at year-end unless your plan offers the $680 carryover provision. For a recurring expense like an OTC CGM subscription, an HSA offers more long-term flexibility and investment potential.
How much can I save on an OTC CGM using my HSA or FSA?
Using pre-tax dollars from an HSA or FSA typically yields savings of 20% to 30%, depending on your federal and state income tax brackets. For the $1,068 annual cost of a Dexcom Stelo subscription, this equates to $214 to $320 back in your pocket. This savings directly reduces your effective out-of-pocket cost for managing your metabolic health.
Can I use my FSA/HSA debit card to buy an OTC CGM online?
Usually, yes. Major OTC CGM vendors like stelo.com and hellolingo.com accept standard Visa/Mastercard debit cards, which includes most FSA/HSA cards. If your card is declined, you can pay with a personal card and submit the receipt for reimbursement through your account portal. Purchasing from approved retailers like Amazon or Walgreens using their FSA/HSA storefronts is another reliable method.
Do I need a doctor's note or Letter of Medical Necessity for an OTC CGM?
No. A key benefit of OTC CGMs like Dexcom Stelo and Levels Lingo is that they do not require a prescription or a Letter of Medical Necessity for FSA/HSA eligibility, unlike prescription-only models. Their eligibility stems from the CARES Act. You should still buy them for a qualified medical purpose, such as managing prediabetes or metabolic conditions.
What happens to my HSA or FSA funds if I stop using the OTC CGM?
HSA funds remain yours forever and can be invested for future healthcare or retirement costs. FSA funds are generally 'use-it-or-lose-it,' though many plans now allow a carryover of up to $680 into the next plan year. If you have a recurring subscription, remember to cancel it or adjust your FSA elections during your next open enrollment to avoid wasting pre-tax dollars.
Are OTC CGMs covered by standard health insurance?
Most standard health insurance plans do not cover OTC CGMs for non-diabetic or prediabetic users. This makes FSA and HSA accounts the primary funding source for these devices if you're using them for general metabolic health, weight management, or prediabetes monitoring. Always check with your insurer, but plan to use your tax-advantaged accounts.
Related Resources
More HSA Resources
FSA vs HSA: Which to Choose
Side-by-side comparison with worked dollar examples for 2026
HSA-Eligible Expenses
Search canonical HSA expense decisions and documentation rules
What Is an HSA?
Complete guide to Health Savings Accounts
2026 Contribution Limits
See how much you can contribute this year
HSA Calculators
Tax savings, shoebox growth, and more
Compare your own HSA options
Track and compare your healthcare costs in HSA Trackr. See where your money goes.
Start Tracking