Are Health and Wellness Services Considered Covered Medical Expenses by the IRS?
The IRS releases updated FAQs addressing covered expenses under HSAs, FSAs and HRAs
On March 17, 2023, the IRS posted answers to frequently asked questions regarding whether certain costs related to nutrition, wellness, and general health are medical expenses that can be paid or reimbursed under a health savings account (HSA), health flexible spending arrangement (FSA), or health reimbursement arrangement (HRA).
The below FAQs were released to address if certain medical expenses fall under IRS Section 213 of the Code.
Q1: Is a dental exam considered a medical expense that can be paid or reimbursed by an HSA, FSA, Archer MSA, or HRA?
A1: Yes, because the dental exam provides a diagnosis of whether a disease or illness is present.
Q2: Is an eye exam considered a medical expense that can be paid or reimbursed by an HSA, FSA, Archer MSA, or HRA?
A2: Yes, because the eye exam provides a diagnosis of whether a disease or illness is present.
Q3: Is a physical exam considered a medical expense that can be paid or reimbursed by an HSA, FSA, Archer MSA, or HRA?
A3: Yes, because the physical exam provides a diagnosis of whether a disease or illness is present.
Q4: Is the cost of a program to treat a drug-related substance use disorder considered a medical expense that can be paid or reimbursed by an HSA, FSA, Archer MSA, or HRA?
A4: Yes, because the program treats a disease (substance use disorder).
Q5: Is the cost of a program to treat an alcohol use disorder considered a medical expense that can be paid or reimbursed by an HSA, FSA, Archer MSA, or HRA?
A5: Yes, because the program treats a disease (alcohol use disorder).
Q6: Is the cost of a smoking cessation program considered a medical expense that can be paid or reimbursed by an HSA, FSA, Archer MSA, or HRA?
A6: Yes, because the smoking cessation program treats a disease (tobacco use disorder).
Q7: Is therapy considered a medical expense that can be paid or reimbursed by an HSA, FSA, Archer MSA, or HRA?
A7: Yes, if the therapy is treatment for a disease. For example, an amount paid for therapy to treat a diagnosed mental illness is a medical expense, but an amount paid for marital counseling is not.
Q8: Is nutritional counseling considered a medical expense that can be paid or reimbursed by an HSA, FSA, Archer MSA, or HRA?
A8: Yes, but only if the nutritional counseling treats a specific disease diagnosed by a physician (such as obesity or diabetes). Otherwise, the cost of nutritional counseling is not a medical expense.
Q9: Is a weight-loss program considered a medical expense that can be paid or reimbursed by an HSA, FSA, Archer MSA, or HRA?
A9: Yes, but only if the program treats a specific disease diagnosed by a physician (such as obesity, diabetes, hypertension, or heart disease). Otherwise, the cost of a weight-loss program is not a medical expense.
Q10: Is a gym membership considered a medical expense that can be paid or reimbursed by an HSA, FSA, Archer MSA, or HRA?
A10: Yes, but only if the membership 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). Otherwise, the cost of a gym membership is for the general health of the individual and is not a medical expense.
Q11: Is exercise for the improvement of general health, such as swimming or dancing lessons, considered a medical expense that can be paid or reimbursed by an HSA, FSA, Archer MSA, or HRA?
A11: No, because the exercise, even if recommended by a doctor, is only for the improvement of general health.
Q12: Are food or beverages purchased for weight loss or other health reasons considered a medical expense that can be paid or reimbursed by an HSA, FSA, Archer MSA, or HRA?
A12: Yes, but 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 is not met, the cost of food or beverages is not a medical expense.
Q13: Are nonprescription (over-the-counter) drugs and medicines considered a medical expense that can be paid or reimbursed by an HSA, FSA, Archer MSA, or HRA?
A13: Yes. 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 section 213 of the Code. However, the cost of over-the-counter drugs and also menstrual care products may be paid or reimbursed by an HSA, FSA, Archer MSA, or HRA.
Q14: Are nutritional supplements considered a medical expense that can be paid or reimbursed by an HSA, FSA, Archer MSA, or HRA?
A14: Yes, but only if the supplements are recommended by a medical practitioner as treatment for a specific medical condition diagnosed by a physician. Otherwise, the cost of nutritional supplements is not a medical expense.
For more information about whether costs related to nutrition, wellness and general health are medical expenses, see Publication 502, Medical and Dental Expenses, and Tax Topic 502, Medical and Dental Expenses.
For more information about HSAs, FSAs, Archer MSAs and HRAs, see Publication 969, Health Savings Accounts and Other Tax-Favored Health Plans.