Health Flexible Spending Accounts Can Cover Certain Nutrition, Wellness, And General Health Expenses

CATEGORY: Client Update for Public Agencies
CLIENT TYPE: Public Employers
DATE: May 04, 2023

The IRS recently issued FAQs providing information about what costs for nutrition, wellness, and general health qualify as medical expenses that can be paid for or reimbursed under a health flexible spending account (FSA), health savings account (HSA), or health reimbursement account (HRA).  Internal Revenue Code section 213 generally allows a tax deduction for medical expenses.  Medical expenses are also allowed to be paid for or reimbursed tax-free by a health FSA, HSA, or HRA.  Medical expenses are the costs of diagnosis, cure, mitigation, treatment, or prevention of disease, and for the purpose of affecting any part or function of the body.  Medical expenses do not include costs for services that are merely beneficial to general health.

Many of the FAQs explain that a cost can be paid or reimbursed by a health FSA, HSA, or HRA when it treats a disease.  The following costs are considered medical expenses that may be paid or reimbursed on a non-taxable basis:

  • Drug and alcohol treatment programs because the programs treat a disease (substance use disorder and alcohol use disorder).
  • Smoking cessation program because it treats a disease (tobacco use disorder).
  • Therapy is the treatment for a disease, such as therapy to treat a diagnosed mental illness.
  • Nutritional counseling and weight loss programs if they treat a specific disease diagnosed by a physician, such as obesity or diabetes.
  • Gym membership only if it was purchased for the sole purpose of affecting a structure or function of the body, such as physical therapy to treat an injury, or the sole purpose of treating a specific disease.
  • Food or beverages purchased for weight loss or other health reasons, but only if it does not satisfy normal nutritional needs, alleviate or treat an illness, and a physician substantiates the need.
  • Over-the-counter drugs and menstrual care products.

The FAQs specify that marital counseling and exercise for the improvement of general health cannot be reimbursed by a health FSA, HSA, or HRA.

For more information, see the IRS FAQs: https://www.irs.gov/individuals/frequently-asked-questions-about-medical-expenses-related-to-nutrition-wellness-and-general-health

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