Millions of Americans have used medical marijuana. Is it covered by their FSAs?

Tomorrow marks an unofficial holiday celebrated by marijuana users across the U.S.: April 20, more commonly known as 4/20. 

Once a fringe substance, weed is now mainstream, and millions of Americans use it to treat a host of medical ailments including chronic pain and nausea. Currently, 24 U.S. states have legalized overall consumption of weed, and another 14 states allow medicinal use, according to a recent report from the Pew Research Center. Around 2.5% of U.S. adults, or 8.3 million people, said they have used marijuana under their physician’s authorization, according to 2020 research from the American Journal of Preventive Medicine (AJPM). 

But for those who partake legally and medicinally, one question remains: do flexible spending accounts, or FSAs, cover cannabis? 

FSAs are an arrangement in which employees can set aside up to $3,200 of their pre-tax income annually to pay for out-of-pocket medical costs. That money can be used for healthcare expenses like deductibles, copayments, and qualifiable prescription drugs. What exactly qualifies as a medical expense isn’t always clear, but one thing’s for sure: Marijuana does not. 

“The issue with medical marijuana is it’s still considered a schedule one drug,” Paul Fronstin, director of health benefits research at Employee Benefit Research Institute (EBRI), a nonprofit organization, tells Fortune. That puts it in the same federal category as LSD and ecstasy. “So since it’s technically not a legal drug under federal law, you can’t use an FSA to get reimbursed for medical marijuana.”

Even if the federal government does legalize marijuana at some point, it’s still uncertain whether companies would allow workers to charge medical cannabis toward their FSA spending, according to Fronstin. Employers have the right to choose what they cover under the purview of qualified medical benefits not included in traditional healthcare plans—and the fuzziness around exactly how and why employees are using marijuana might prove too much for some companies.    

“Employers may just say, ‘You can’t use any marijuana because we don’t want to deal with having to distinguish between medical and recreational,’” he says. 

Although FSA coverage for medical cannabis may be a lost cause for now, it could potentially be covered as an employee benefit through lifestyle spending—employer-funded accounts with money set aside for workers to spend at their discretion. And as American weed usage continues to trend upwards, more workers may value companies that subsidize marijuana over those that don’t. 

“As these lifestyle spending accounts become more popular, employers are looking for different ways to benefit employees,” Wade Symons, regulatory resource group leader at Mercer, an HR consulting firm, tells Fortune. But he adds that that hesitation about any rule breaking is likely to still linger.

“Employers would probably be somewhat wary of doing that,” he says. “Just because they’re not wanting to facilitate something that remains illegal at the federal level.”

Emma Burleigh
emma.burleigh@fortune.com

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