On March 17, 2023, the Internal Revenue Service (IRS) released frequently asked questions (FAQs) via IRS News Release IR-2023-47 regarding the reimbursement of nutrition, wellness, and general health expenses under health flexible spending accounts (Health FSAs), health savings accounts (HSAs) and health reimbursement arrangements (HRAs).
The details:
Internal Revenue Code Section 213 defines medical care 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. The FAQs explain that medical expenses must be primarily to alleviate or prevent a physical or mental disability or illness, and do not include expenses that are merely beneficial to general health.
A sampling of the FAQs are as follows:
Q1: Is the cost of a dental exam 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.
Q4: Is the cost of a program to treat a drug-related substance use disorder 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).
Q9: Is the cost of a weight-loss program 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 the cost of a gym membership 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 the cost of exercise for the improvement of general health, such as swimming or dancing lessons, 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.
Next steps:
Employers should review the IRS guidance provided in the FAQs to verify that their plans where applicable are reimbursing only eligible expenses.
For a copy of all the FAQs please click on the link provided below.
https://www.irs.gov/individuals/frequently-asked-questions-about-medical-expenses-related-to-nutrition-wellness-and-general-health
Have questions?
Please contact your ADP Service Representative with any questions.