The IRS has issued a series of Frequently Asked Questions (“FAQs”) to provide guidance as to whether certain costs related to nutrition, wellness, and general health are medical expenses that may be paid or reimbursed on a tax-exempt basis under a group health plan, health savings account (“HSA”), health flexible spending arrangement (“FSA”), or health reimbursement arrangement (“HRA”).
Background. In order to be deductible under Internal Revenue Code (“Code”) Section 213(a) or subject to tax-exempt reimbursement, the cost of an item or service generally must meet the definition of “medical care” expenses under Code Section 213(d). This section defines medical expenses as amounts paid for the diagnosis, cure, mitigation, treatment or prevention of disease, or for the purpose of affecting a structure or function of the body. An expense may qualify only if it is “primarily” for the prevention or alleviation of a physical or mental defect or illness, and only if the expense would not have been incurred but for the disease or condition.
FAQs. The FAQs begin by reiterating that dental and eye care examinations and physicals are all medical expenses since they provide a diagnosis of whether a disease or illness is present. Treatments for alcoholism, substance abuse and smoking cessation are all considered medical expenses because they treat a disease. An amount paid for therapy to treat a diagnosed mental illness is a medical expense, but an amount paid for marital counseling is not.
Except for the cost of insulin, the cost of a drug that isn’t prescribed by a physician is not a medical expense that is deductible under Code Section 213. However, the cost of over-the-counter drugs and also menstrual care products may be paid or reimbursed by a group health plan, HSA, FSA, or HRA.
Nutritional counseling is a medical expense only if it treats a specific disease diagnosed by a physician (such as obesity, diabetes, hypertension or heart disease). Similarly, weight loss programs are a medical expense only if the program treats a specific disease diagnosed by a physician. Otherwise, the cost of a weight loss program is not a medical expense. Nutritional supplements are medical expenses only if the supplements are recommended by a medical practitioner as treatment for a specific medical condition diagnosed by a physician.
A gym membership is a medical expense only if it was purchased for the sole purpose of affecting a structure or function of the body (such as a prescribed plan for physical therapy to treat an injury) or the sole purpose of treating a specific disease diagnosed by a physician (such as obesity, hypertension, or heart disease). The cost of an exercise program for the improvement of general health is not a medical expense.
The cost of food or beverages purchased for weight loss or other health reasons is a medical expense, only if: (1) the food or beverage doesn’t satisfy normal nutritional needs; (2) the food or beverage alleviates or treats an illness; and (3) the need for the food or beverage is substantiated by a physician. The medical expense is limited to the amount by which the cost of the food or beverage exceeds the cost of a product that satisfies normal nutritional needs. If any of the three requirements are not met, the cost of food or beverages is not a medical expense.
The FAQs are available at: https://www.irs.gov/individuals/frequently-asked-questions-about-medical-expenses-related-to-nutrition-wellness-and-general-health.