The Internal Revenue Service (IRS) alerted taxpayers that expenses related to general health and wellness needs will not be considered medical expenses under tax law and thus cannot be deducted from certain health-related accounts.
Some companies are falsely claiming that notes from doctors based on self-reported health information are sufficient to convert non-medical food, wellness, and exercise expenses into medical expenses, the IRS said in a press release on March 6. However, such notes will not qualify general health expenses as medical expenses, the agency clarified. According to the IRS, medical expenses include “costs of diagnosis, cure, mitigation, treatment, or prevention of disease, and for the purpose of affecting any part or function of the body.”
Payments made to physicians, medical practitioners, dentists, and surgeons are considered medical expenses. Any related costs of equipment, supplies, and diagnostic devices are included as well. Costs of medicine and drugs prescribed by physicians are seen as medical expenses.
In contrast, general health expenses include costs related to things like gym memberships, dietary supplements, nutrition meal plans, and fitness-tracking devices.
General health expenses “are not deductible or reimbursable” under health flexible spending arrangements (FSA), health savings accounts (HSA), health reimbursement arrangements (HRA), or medical savings accounts (MSA), the agency stated.
HSAs and FSAs allow people to set aside some of their pretax earnings that can then be used to pay for medical expenses. MSAs receive funding from an individual’s Medicare plan that may be utilized for meeting healthcare costs. HRAs are employer-funded plans that reimburse workers for certain medical costs.
“Legitimate medical expenses have an important place in the tax law that allows for reimbursements,” said IRS Commissioner Danny Werfel.
“But taxpayers should be careful to follow the rules amid some aggressive marketing that suggests personal expenditures on things like food for weight loss qualify for reimbursement when they don’t qualify as medical expenses.”
In order to clarify the issue, IRS gave the example of a diabetic person who decides to eat lower-carb foods to control blood sugar.
The person “sees an advertisement from a company stating that he can use pretax dollars from his FSA to purchase healthy food if he contacts that company. He contacts the company, who tells him that for a fee, the company will provide him with a ‘doctor’s note’ that he can submit to his FSA to be reimbursed for the cost of food purchased in his attempt to eat healthier,” the agency stated.
A Controversial Decision
During an interview with The Washington Post, Calley Means, a co-founder of Truemed, criticized the IRS policy, stating that the agency is on shaky ground regarding the matter. Truemed is a company that assists people in securing letters of medical necessity to buy items through health savings accounts.“In the midst of a chronic disease crisis that is crippling the American people, why is the IRS picking a war with food and exercise interventions that are recommended by doctors to treat specific health conditions?” he asked.
The IRS is establishing a higher bar for taxpayers to get “medically tailored exercise and food plans than antidepressants and Ozempic.” It is a common practice to use questionnaires to identify medical conditions of patients and then suggest pharmaceutical interventions, Mr. Means stated.
“Let’s call this what it is: an attempt by regulators to confuse and freeze the trend of Americans learning that they can work with their doctors to reverse disease with food, not drugs.”
Some health expenses that may seem like general health expenses can be paid or reimbursed by health savings accounts under certain conditions.
For instance, the cost of nutritional counseling can be considered a medical expense provided it seeks to treat a specific disease that is diagnosed by a physician, like diabetes or obesity. “Otherwise, the cost of nutritional counseling is not a medical expense,” the IRS states. The same is the case for any weight loss program.
The cost of a gym membership may be considered as a medical expense if the membership is aimed at affecting a structure or function of a body as prescribed under a physical therapy plan to treat an injury. Regular gym memberships won’t be classified as medical expenses.
If a person buys food or beverages that alleviate or treat an illness or the consumption of such items is substantiated by a physician, such costs may be seen as medical expenses. However, if these products are aimed at satisfying normal nutritional needs, they cannot be reimbursed.
Mr. Means pointed out that the IRS’s latest alert seems to indicate the agency does not see food as medicine, which would contradict the Biden administration’s “Food is Medicine” initiative launched last year.
“Access to nutritious food is critical to health and resilience. Food is Medicine is a concept that reaffirms this connection, recognizing that access to high-quality nourishment is essential for well-being,” the initiative states.
