Examples of Qualifying Medical s (Defined in Section 213 of the Internal Revenue Code) Abortion Acne Treatment (OTC) Acupuncture Adoption, pre-adoption medical expenses Alcoholism treatment Allergy medicine Ambulance Analgesics (Ex: Advil, Aspirin, Tylenol) Antacids (Ex: Maalox, Prilosec OTC, Zantac) Antibiotic ointments (Ex: Bacitracin, Neosporin) Antihistamines (Ex: Benadryl, Claritin) Anti-itch creams (Ex: Benadryl, Cortaid, Ivarest) Arthritis gloves Artificial limbs and teeth Asthma treatments Bandages Birth control pills Blood pressure monitoring devices Blood sugar test kit and strips Body scan Braille books and magazines Breast reconstruction surgery following Calamine lotion Carpal tunnel wrist supports Chelation therapy Chiropractors Circumcision Coinsurance, copayments and deductibles Cold medicine (Ex: Comtrex, Sudafed) Cold/hot packs Contact lenses, materials and equipment Contraceptives Cough suppressants (Ex: Pediacare, Robitussin, cough drops) Crutches Decongestants (Ex: Dimetapp, Sudafed) Dental treatment Diabetic supplies Diagnostic items/services Diaper rash ointments and creams Diarrhea medicine (Ex: Imodium, Kaotectate) Drug addiction Drug overdose, treatment of Ear wax removal products (Ex: Debrox, Murine) Expectorants (Ex: Comtrex, Robitussin) Eye drops (Ex: Visine) Eye exam and eyeglasses, equipment Fever reducing medications (Ex: Aspirin, Motrin) First aid cream First aid kits Flu shots Prescribed and OTC drugs qualify however, the cost of regular skin care (face creams etc.) do not qualify (e.g. Retin-A can be used to treat acne and wrinkles), a physician s letter of medical necessity would be Medical expenses incurred before adoption is finalized are qualifying if the child qualifies as your tax dependent when the service/items are provided. s qualify for amount paid for inpatient treatment (including meals and lodging) at a therapeutic center for alcohol addiction will qualify. Transportation costs associated with attending meetings of AA in community will also qualify if attending due to physician s advice. Letter from physician needed for this transportation expense. Elastic or for torn or injured skin Only portion above the cost of regular printed material. To the extent that surgery was done following a mastectomy for cancer. This is an exception to the rule regarding cosmetic procedures. If used to treat a medical condition such as lead poisoning. If underlying service/item qualifies as qualifying expense. If sold as medical supply to alleviate a specific medical condition such as a knee or back injury, not qualified if purpose to keep beverages cold or hot. Amount paid for lenses needed for medical reasons, as well as materials and equipment needed for using lenses, such as saline solution, distilled water and enzyme cleaner. Contact lenses solely for the purposes of changing one s eye color do not qualify. Contact lens insurance does not qualify. Includes birth control pills, condoms, morning-after pill and spermicidal foam. Whether purchased or rented. If amounts paid for treatment including fees for x-rays, fillings,braces, extractions, sealants, bridges, dentures and denture adhesives, crowns, orthodontia, etc. but not teeth whitening. Such items as blood sugar test kits and test strips; glucose monitors and insulin Includes procedures to determine the presence of disease or dysfunction of the body, such as tests to detect heart attack, stroke, diabetes, thyroid conditions, osteoporosis and cancer. Amounts paid for inpatient s treatment at a therapeutic center for drug addiction will qualify. Includes amounts paid for eyeglasses and lenses prescribed by a physician and eyeglass cleaners. Includes antiseptic, elastic bandages, bandages for torn or injured skin, liquid adhesive, alcohol wipes, gauze pads, pain medication, etc.
Examples of Qualifying Medical s Gauze pads Guide dog or other animal aide Headache medications (Ex: Advil, Aspirin, Tylenol) Hearing aids Hemorrhoid treatments (Ex: Preparation H) services Hospital services Immunizations Insect bite creams/ointments (Ex: Benadryl, Cortaid) Insulin Laboratory fees Laser eye surgery; Lasik Laxatives (Ex: Ex-Lax) Liquid adhesive Mastectomy-related special bras Medical monitoring and testing devices Medical records charges Medical services Motion sickness pills (Ex: Bonine, Dramamine) Nicotine gum or patches (Ex: Nicoderm, Nocorette) Non-prescription drugs and medicines Norplant insertion or removal Obstetrical expenses Occlusal guards to prevent teeth grinding Optometrist Organ donors Orthodontia Osteopath fees Over-the-counter (OTC) medicines Ovulation monitor Oxygen Pain relievers (Ex: Aspirin, Midol, Tylenol) Patterning exercises Physical exams Physical therapy Pregnancy test kits Prescription drugs Preventive care screenings Prosthesis Psychiatric care Radial keratotomy Reading glasses Safety glasses (prescription only) Screening tests Seeing-eye dog Shipping & handling fees Sinus medications (Ex: Sudafed) Sleep deprivation treatment Smoking cessation program and drugs Speech therapy Spermicidal foam Sterilization procedures Stop smoking program Includes amount paid for purchase, training and care of animals used by visually or hearing impaired person. Vet fees for such animals also qualify as medical care. The cost for hearing aid and batteries for its operation qualify. Includes equipment needed to inject the insulin, such as syringes or insulin pumps. Items such as blood pressure monitors, syringes, glucose kit, etc. Includes such expenditures as amounts paid for legal medical services prescribed by physicians, surgeons, specialists and other medical practitioners. s of hiring someone to give patterning exercises to a mentally retarded child which consist of coordinated physical manipulation of a child s arms and legs to imitate crawling and other normal movements. If an individual pays a fee for a card that provides a discount on all drugs, the fee for the program would not be a qualifying expense but the cost of the drug would be a qualifying expense. Note: Importing prescription drugs from other countries violates federal law. However, a drug or medicine that is purchased and consumed in the other country and is legal in both that country and the US may qualify for reimbursement. Additionally, if the FDA announces that a drug can be legally imported by individuals it may qualify for reimbursement. Includes cost of supporting mentally ill dependent at a special center which provides medical care. Additionally, corneal ring segments (removable plastic half-rings that correct vision) would also qualify. Includes veterinary fees for the care of the guide dog or other animal used by a disabled person. Incurred to obtain an item that constitutes medical care (e.g., drugs or medicines) are inextricably linked to the cost of the medical care and therefore qualify. Amounts paid for smoking cessation (stop-smoking) programs and medications used to stop smoking whether prescribed or OTC. Sterilization is defined as the cost of a legally performed operation to make a person unable to have children. 2
Examples of Qualifying Medical s Sunburn creams and ointments (Ex: Solarcaine) Sunglasses (prescription only) like face Surgery Taxes on medical services or products Telephone for hearing-impaired Television for hearing-impaired Therapy Thermometers Throat lozenges (Ex: Cepacol, Chloraseptic) Toothache and teething pain relievers (Ex: Orajel) Transplants Ultrasound, prenatal Usual and customary charges, excess Vaccines Vasectomy/Vasectomy reversal Wart remover treatments Wheelchair or walkers X-ray fees Yeast infection medications (Ex: Monistat) Sunscreen Must be high SPF (e.g., 30 or 45) generally used to prevent a sunburn. Items Lotion that contain a small sunscreen component do not qualify, nor do suntan lotions. local, sales, service and other taxes. The expenses of buying and repairing special telephone equipment for a hearing impaired person. Equipment that displays the audio part of television programs as subtitles for hearing impaired persons. If the equipment is a part of the television cost and not charged separately, there is no qualified expense. Includes surgical, hospital, laboratory services and transportation expenses for organ donors. is one of excess of an insurance plan s usual, customary and reasonable charge if the underlying expense is for medical care. is the amount paid for purchase as well as cost of operation and upkeep of a wheelchair or autoette, if needed for the relief of sickness or disability. The IRS Publication 502 is to be used as a guide as to what expenses are reimbursable under a health FSA but should recognize that IRS Publication 502 is written to help taxpayers determine what medical expenses can be deducted on Schedule A to the Form 1040, and that some deductible expenses listed in the IRS Publication 502 are not reimbursable under a health FSA (e.g., health insurance premiums are deductible, but not reimbursable under a health FSA). Also note that a tax deduction is claimed for the year the expense is paid, while reimbursement under a health FSA depends only on when the expense was incurred (time of payment is irrelevant). 3
Administrative costs Air conditioner/air Purifier/Humidifier Examples of Potentially Qualifying Medical s (Defined in Section 213 of the Internal Revenue Code) Monthly account maintenance fees for health FSA or HSA are a qualifying expense. Must be recommended by medical practitioner to treat a specific medical condition and used primarily by the person who has the medical condition. If central air, only the amount spent that is more than the value added to the property will qualify. Also, if others benefit from the air conditioning, then only the pro-rata amount allocable to the person with the medical condition will qualify. Allergy treatment products; household improvements; will not qualify if products would be owned to treat allergies even without allergies, such as pillow or a vacuum cleaner. However, an air purifier or water filter necessary to treat a specific medical condition might qualify. A physician s letter of medical necessity would be Alternative healers, dietary substitutes, and drugs and medicines Automobile modifications Behavioral modification programs Birthing classes Blood storage Breast pumps Capital expenses Childbirth classes Chinese herbal practitioner & herbal treatments Chondroitin Treatments must be legal and provided by professional. s do not qualify if the remedy is a food or substitute for food that the person would normally consume in order to meet nutritional requirements. A physician s letter of medical necessity would be A physician s letter of medical necessity would be required recommending the item to treat a specific condition (e.g.; physical handicap). s of operating a specially equipped care do not qualify. Fees for temporary storage may qualify in instances where blood is collected as part of The diagnosis, treatment or prevention of an existing or imminent medical condition (e.g., in advance of a scheduled surgery for use in a possible transfusion). Iif there is an underlying medical reason, (e.g., breast abscess) and not merely for convenience, scheduling or other personal reasons. A physician s letter of medical necessity would be Improvements or special equipment added to a home (elevator, lift, inclinator, etc) or other capital expenditures (car modifications for a physically handicapped person) may qualify if the primary purpose of the expenditure is medical care for you or your dependent. How much of the expense would depend on the extent to which the expense permanently improves the property and whether others, besides the person with the medical condition, will benefit (see the pro rata rule under Air conditioners). If used primarily for medical care such as arthritis, not just to maintain general health. A physician s letter of medical necessity is needed. Christian Science practitioners If payments are for medical care. Cosmetic procedures Only procedures necessary to ameliorate a deformity arising from congenital abnormality or personal injury from an accident or trauma or disfiguring disease would qualify. Counseling If for medical reason, marriage counseling does not qualify. A physician s letter of medical necessity would be Diapers or diaper service Only if amounts are paid for services to relieve the effects of a particular disease (e.g., Muscular Dystrophy, Cerebral Palsy, adults who suffer from urinary incontinence, etc.). A physician s letter of medical necessary would be Dietary supplements If primarily for medical care and recommended by a medical practitioner to treat a specific medical condition. (i.e. 1,000 mg of Vitamin B-12 daily to treat a specific vitamin deficiency). A physician s letter of medical necessity would be DNA collection and storage Only in cases where DNA is collected as part of the diagnosis, treatment or prevention of an existing or imminent medical condition but then only when stored on a temporary basis. (i.e. used within the same plan year). Drugs and medicines If used primarily for medical care and not for personal, general health or a cosmetic purposes, legally obtained and generally accepted as drug or medicine. Can be prescribed or OTC (Over-the-Counter) and meets eligibility requirements to qualify. Dyslexia. Ear plugs To the extent prescribed by a physician for a specific medical condition (for example, to protect surgically implanted ear tubes). Egg donor fees Amounts paid for the egg donor fee, an agency fee, an egg donor s medical and psychological testing and the legal fees for preparation of the egg donor contract. Eggs and embryos, storage fees If amounts paid for temporary storage qualify but only to the extent necessary for immediate conception. Storage fees for undefined future conception may not be considered medical care. Elevator Exercise equipment or programs Upon the advice of a physician so that a person with heart disease won t have to climb stairs but only to the extent of the amount in excess of value enhancement to the property. A physician s letter of medical necessity would be required only if required to treat an illness (such as obesity) diagnosed by a physician. The purpose of the expense must be to treat the disease rather than to promote general health and the expense must not have been paid but for this purpose. A letter of medical necessity will be 4
Examples of Potentially Qualifying Medical s Fertility treatments Fiber supplements Fitness programs Fluoridation device or services Gambling problem, treatment for Genetic testing Glucosamine (Chondroitin) Health club dues and fees Health institute fees Herbs Holistic or natural healers, dietary substitutes, and drugs and medicines Home improvements (such as exit ramps, Hormone replacement therapy (HRT) Household help Hypnosis Inclinator Incontinence supplies Lactation consultant Lamaze classes Language training Lead-based paint removal Learning disability, instructional fees Qualifying expense to the extent that procedures are intended to overcome an inability to have children. Examples are IVF, surgery (including reversal of a previous surgery preventing someone from having children), shots, treatments and GIFT. s paid to or for an in vitro surrogate usually do not qualify. If used to treat a diagnosed medical condition (such as irritable bowel syndrome) until the condition is alleviated. A letter of medical necessity is Qualifying expense if recommended by dentist to prevent tooth decay. The amount that qualifies is limited to the cost allocable to the current year. If Pathological gambling has been classified as a disorder by the American Psychiatric Association and therefore, could be considered a mental illness and if so, treatment would be a qualifying expense. To the extent it is done to determine possible defects (e.g., defects of an unborn child if mother is over age 35) it would be considered medical care. Testing done just to determine the sex of the fetus does not qualify. A physician s letter of medical necessity would be If used primarily for medical care (to treat arthritis) but does not qualify if used just to maintain general health. A physician s letter of medical necessity would be Only if incurred upon the advice of a medical practitioner to treat a specific medical condition, such as rehab after back surgery or treatment of obesity. The expense must not have been incurred prior to the diagnosis, or fees would not qualify. When treatment is no longer needed, the fees would no longer qualify. A physician s letter of medical necessity is needed. Only if treatment at the health institute is prescribed by a physician who issues a written statement confirming treatment is necessary to alleviate a physical or mental defect or illness of the individual receiving the treatment. If done to accommodate a disability. If the improvement widening doorways, etc.) is permanent and increases the value of the property, the expense will qualify only to the Extent that the improvement cost exceeds the increase in property value. If the improvement does not increase the property value then the entire cost may qualify. Items that usually do not increase property value are entrance or exit ramps, widening or modifying doorways or hallways, installing railings or support bars to bathrooms, lowering or modifying kitchen cabinets or equipment, moving or modifying electrical outlets and fixtures installing porch lifts, modifying fire alarms or smoke detectors, modifying other warning systems and modifying stairways. A physician s letter of medical necessity would be If used primarily for medical care (for example, to treat menopausal symptoms such as hot flashes, night sweats, etc). will not qualify if used primarily for maintaining general health. A physician s letter of medical necessity would be Only if expenses meet definition of nursing services. Does not qualify with physician s letter of medical necessity. When performed by a professional to treat a medical condition, or for other medical purposes (e.g., smoking cessation); won t qualify if for general stress relief, personal enjoyment, or other personal purposes. A physician s letter of medical necessity would be If used to relieve the effects of a particular disease (for example adult diapers that would not have been bought but for the medical condition of the patient) i.e.; ALS, Alzheimer s disease, MS etc., even though diapers for healthy newborns do not qualify. A physician s letter of medical necessity would be When a woman is experiencing lactation problems and cannot breast-feed her child. A physician s letter of medical necessity would be When dealing with instruction relating to birth and not childrearing. Fee should be apportioned to exclude instruction on topics such as newborn care. s for the coach or significant other are not qualifying expenses. If for a child with dyslexia or a disabled child but not fees for regular schooling. A physician s letter of medical necessity would be To prevent a child who has or has had lead poisoning from eating the paint. The cost of re-painting is not a medical expense. A physician s letter of medical necessity would be If prescribed by a physician, tuition paid to a special school and tutoring fees paid to a specially trained teacher for a child who has severe learning disabilities caused by mental or physical impairments. Legal fees, general fees for legal services retained to authorize treatment for mental illness may qualify or if medical care could not have been provided without legal assistance. 5
Examples of Potentially Qualifying Medical s Legal fees in connection with fertility treatments Lodging at a hospital or similar institution Lodging of a companion Massage therapy Meals at a hospital or similar institution Medical alert bracelet or necklace Medical conference admission, transportation, Meals, etc. Medical information plan charges Mentally handicapped, special home for Mineral supplements Nasal strips or sprays Nursing services provided by a nurse Nutritionist s professional expenses Nutritional supplements Operations Orthopedic shoes and inserts Over-the-counter (OTC) medicines Personal trainer fees Propecia Psychologist Retin-A If the legal fees are in connection with a medical procedure performed upon you (or your spouse or dependent). Legal fees for preparing a contract for you to obtain a donated egg from an egg donor may qualify. However, legal fees incurred in connection with a procedure performed on a surrogate mother do not constitute medical care. If the main reason for being there is to receive medical care. Lodging not at a hospital or similar institution potentially qualifying expense up to $50 per night if these conditions are met: (1) the lodging is primarily for and essential to medical care; (2) the medical care is provided by a physician in a licensed hospital or medical care facility related to (or equivalent to) a licensed hospital; (3) the lodging isn t lavish or extravagant; and (4) there is no significant element of personal pleasure, recreation or vacation in the travel. If a parent is traveling with a sick child, up to $100 may qualify ($50 for each person). If accompanying a patient for medical reasons and all of the conditions described under Lodging not at a hospital or similar institution are also met. For example, if a parent is traveling with a sick child, up to $100 per night ($50 for each person) will qualify. If prescribed by a physician to treat a specific injury or trauma but not if just to improve general health. A physician s letter of medical necessity would be If the main reason for being there is to receive medical care. If recommended by a physician in connection with treating a medical condition. A physician s letter of medical necessity would be Amounts paid by an individual for expenses of admission transportation, meals, etc. to/ from conference relating to the chronic disease of the individual s dependent are Code 213 expenses and if primarily essential to the medical care of the dependent. Transportation expenses include transportation to the city where the conference is held, plus local transportation to the conference. The cost of meals and lodging while attending the conference are not allowed. If storage costs are expenses paid to a plan to keep medical information so it can be retrieved from a computer databank for you (or your spouse s or dependent s) medical care. If cost of keeping mentally handicapped person in a special home (not a relative s home) on a psychiatrist s recommendation to help the person adjust from life in a mental hospital to a community living environment. If mineral supplement is recommended by a medical practitioner for a specific medical condition (for example, a prescribed dosage of iron daily to treat iron-deficiency anemia). A physician s letter of medical necessity would be Only if used to treat sinus problems or when used to prevent sleep apnea. Would not qualify for reimbursement when used to prevent ordinary snoring. A physician s letter of medical necessity would be. If amounts spent in wages, employment taxes and other or other attendant nursing services (including extra costs for nurses room and board) whether provided in the participant s home or another facility. Services not being performed by a nurse qualify so long as the services are of a kind generally performed by a nurse. These services would be connected with the caring for the patient s condition, such as giving medication or changing dressings as well as bathing and grooming. If the person providing the nursing services also provides household and personal services, the expense must be accounted for separately and will not qualify for reimbursement. Nursing services provided for a normal, healthy baby are not a qualifying expense. If treatment relates to a specifically diagnosable medical condition, not a qualifying expense if expense is for general health. A physician s letter of medical necessity would be If operations are legal and are not considered cosmetic procedures. If cost of the orthopedic item exceeds the cost of ordinary personal use item and only the excess cost of the item qualifies. If a medical practitioner has recommended supervised exercise regimen in order to treat a disease or injury (e.g.; rehabilitation after surgery or the treatment of obesity) and if incurred for a limited duration. The expense must not have been incurred but for the disease (e.g.; if you were working with a personal trainer prior to being diagnosed, the expense would not qualify). A physician s letter of medical necessity would be If it is used to improve a deformity arising from congenital abnormality, personal injury from accident or trauma, or disfiguring disease. Psychoanalysis potentially qualifying expense if provided for medical care and not just general improvement of mental health, relief of stress, or personal enjoyment, nor if the expense stems from training to be a psychoanalyst. A physician s letter of medical necessity would be If expenses is for medical care and not just for general improvements of mental health, relief of stress or personal enjoyment. A physician s letter of medical necessity would be If prescribed by a physician for a specific medical condition such as acne vulgaris and not for cosmetic purposes. A physician s letter of medical necessity would be 6
Examples of Potentially Qualifying Medical s Rogaine Schools and education, residential Schools and education, special Special foods (e.g., gluten-free or salt-free diet) Sperm, storage fees St. John s Wort Stem cell, harvesting and/or storage of Travel expenses for person seeking Travel expenses for person other Treadmill Tuition for special needs program Tuition evidencing separate breakdown for medical expenses Umbilical cord, freezing and storing of Varicose veins, treatment of Vitamins (prenatal only) Weight loss program and/or drugs prescribed to induce weight loss (Ex: Meridia, Xenical, Redux) Wigs If recommended by a medical practitioner for a specific medical condition. A physician s letter of medical necessity would be Certain payments made to a residential school or program to treat individuals for behavioral, emotional, and/or addictive conditions qualify if the primary purpose of the program is medical care. (Educational services can be an incidental but not primary component.) If the child is at the school simply to benefit from the courses and disciplinary methods, the expenses won t qualify sending a person to attend a program to resolve bad personal attitudes in a structured environment does not constitute medical care. Payments made to a special school for a mentally impaired or physically disabled person qualify if the main reason for using the school is its resources for relieving the disability. This includes teaching Braille to a visually impaired person, teaching lip reading to a hearing impaired person, and giving remedial language training to correct a condition caused by a birth defect. Meals, lodging and ordinary education supplied by the special school is only medical care if the child is at the school primarily for relieving the disability. If the child is at the school simply to benefit from the courses and disciplinary methods, the expenses won t qualify. If prescribed by a physician to treat a specific illness or ailment and if the foods do not substitute for normal nutritional requirements. The amount is limited to the amount by which the cost of the special foods exceeds the cost of commonly available versions of the same product. A physician s letter of medical necessity would be If fees are for temporary storage but only to the extent that it is necessary for immediate conception. Storage fees for undefined future conception are not considered to be for medical care. If used primarily for medical care (for example, to treat a diagnosed medical condition such as depression) but not if used to maintain general health. A physician s letter of medical necessity would be If there is a specific and imminent medical condition that the stem cells are intended to treat. For example, the cost of harvesting and storing stem cells because a newborn has a birth defect and the stem cells would be needed in the near future. Collection and storage for an indefinite period of time, just in case the item might be needed is not a qualifying expense. If the expenses are primarily for and essential to medical care and medical care include car expenses, bus, taxi, train, plane and ferry fares and ambulance, services. A standard mileage rate for use of a car to obtain medical care is allowed (rate of reimbursement is restated annually by the IRS). Parking fees and tolls can also qualify. Qualifying expense in the following cases: (1) a parent who must go with a child who needs medical other than patient care; (2) a nurse or other person who gives injections, medications or other treatment required by the patient during transport and is unable to travel alone, and (3) an individual who travels to visit a mentally ill dependent, if such visits are recommended as part of their treatment. If primary purpose is for medical care. Includes reading program for dyslexia. To the extent that charges for medical expenses are separately broken down in a bill for tuition for a college or private school and are for specific qualified medical ervices/items that have been incurred/obtained (and are not premiums for medical care generally). If there is a specific medical condition that the umbilical cord is intended to treat. Collection and storage for an indefinite period of time is not considered medical care and would not be a qualified expense. The cost of storing cord blood where a newborn has a birth defect and where the cord blood would be need in the near future would qualify. If the procedure promotes the proper function of the body or prevents or treats an illness or disease but not if merely to improve appearance and doesn t meaningfully promote the proper function of the body or prevent or treat illness or disease. If taken during pregnancy, prenatal vitamins would be considered primarily for medical Care. Prenatal vitamins taken at other times do not qualify. If the weight-loss program is recommended by a physician to treat an existing disease such as obesity, heart disease or diabetes and is not simply to improve general health. The costs of food associated with a weight-loss program would not qualify for reimbursement since it meets normal nutritional needs. Potentially qualifying expense if prescribed by a physician for the mental health of a person who has lost all of his or her hair from a disease or treatment (e.g., chemotherapy or radiation). A physician s letter of medical necessity would be needed. The IRS Publication 502 is to be used as a guide as to what expenses are reimbursable under a health FSA but should recognize that IRS Publication 502 is written to help taxpayers determine what medical expenses can be deducted on Schedule A to the Form 1040, and that some deductible expenses listed in the IRS Publication 502 are not reimbursable under a health FSA (e.g., health insurance premiums are deductible, but not reimbursable under a health FSA). Also note that a tax deduction is claimed for the year the expense is paid, while reimbursement under a health FSA depends only on when the expense was incurred (time of payment is irrelevant). 7
Examples of Ineligible Medical s (Defined in Section 213 of the Internal Revenue Code) Appearance improvements Babysitting and childcare COBRA premiums Controlled substances in violation of federal law Cosmetic procedures Cosmetics Counseling Dancing lessons Deodorant Dependent care expenses Diapers or diaper service Diet foods Ear piercing Electrolysis or hair removal Face creams Face lifts Feminine hygiene products Fiber supplements Founder s fee Funeral expenses Hair colorants Hair removal and transplants Household help Illegal operations or treatments Insurance Premiums Late fees (Ex: late payment of bills) Legal fees, general Lipsticks Lodging while attending a medical Marijuana or other controlled substances Maternity clothes Mattresses Meals not at a hospital or similar Institution; Meals of a companion; Meals while attending a medical Conference Medical newsletter Missed appointment fees Moisturizers Mouthwash Nail polish Nursing services for a baby One-a-day vitamins Perfume Permanent waves Not a qualifying expense under a Medical FSA for a normal, healthy baby. This includes cosmetic surgery or other procedures that are directed at improving the patient s appearance and don t meaningfully promote the proper function of the body or prevent or treat illness or disease. Examples include face lifts, hair transplants, hair removal electrolysis), teeth whitening, and liposuction. Procedures involving correction due to a congenital deformity or abnormality, personal injury from accident or trauma or disfiguring disease are qualifying expenses. Cosmetics used for personal purposes, and intended to be applied to the human body for cleansing, beautifying, promoting attractiveness or altering the appearance such as skin moisturizers, perfumes, lipsticks, fingernail polish, eye and facial makeup, shampoos, permanent waves, hair colors, toothpastes and deodorants would be categorized. Not a qualifying expense for marriage counseling. Even if prescribed by a physician for improvement of general health. The expenditure might qualify if prescribed by physician to treat a specific medical condition such as part of a rehabilitation program after surgery. A physician s letter of medical necessity. Not a qualifying expense under the Medical FSA even if you are paying for dependent care so that you can receive medical care. Not a qualifying expense for regular diapers or diaper services for Newborns. But diapers or diaper service paid for services to relieve the effects of a particular disease. Costs of special foods to treat a specific disease such as obesity do not qualify to the extent that they satisfy ordinary nutritional requirements and therefore the costs of food associated with a weight-loss program would not qualify since they just meet normal nutritional needs. Not a qualifying expense if taken daily as a supplement to a normal diet. Fiber supplements do qualify if used to treat a diagnosed medical condition such as irritable bowel syndrome until the condition is alleviated. A physician s letter of medical necessity would be Not a qualifying expense even if recommended by physician unless the expenses qualify as nursing services. Not a qualifying expense even if rendered by licensed medical practitioner. Such expenses are not incurred for medical care. Legal fees incident to a divorce (even if prescribed by a physician) are not reimbursable. Ineligible expense if criteria not met as outlined in Medical conference admission, transportation, meals, etc. and Meals while attending a medical conference. An expense may qualify if a unique type of mattress is prescribed by a physician to treat a specific medical condition. A physician s letter of medical necessity would be Not a qualifying expense if the baby is normal and healthy. 8
Examples of Ineligible Medical s Pre-payments Prescription drugs and medicines obtained from other countries Prescription drug discount programs Recliner chairs Safety glasses Shampoos Shaving cream or lotion Skin moisturizers Soaps Surrogate expenses Tanning salons and equipment Teeth whitening Toiletries Toothbrushes Toothpaste Transportation costs of disabled person commuting to and from work Veneers Vision discount programs YMCA day camp Not a qualifying expense if pre-payments are for services/items that have not yet been incurred/obtained. Orthodontia and Fertility treatment expenses paid for up front at the time of the first visit can be apportioned during the treatment plan. Importing prescription drugs from other countries will violate Federal law. Not a qualifying expense if the individual pays a fee for a card that provides a discount on all drugs, the fee would not qualify. Not a qualifying expense unless used exclusively to treat a specific medical condition as diagnosed and prescribed by a medical practitioner. A physician s letter of medical necessity would be Not a qualifying expense unless prescribed by physician. Not a qualifying expense even if for medical care of the surrogate or her unborn child. The procedure must be performed upon you, your spouse or your dependent in order to qualify. Not a qualifying expense even if prescribed by physician for general health. If prescribed by physician to treat a specifically diagnosable condition (e.g., skin disorder) so long as there is no personal element (e.g., use by other family members). A physician s letter of medical necessity would be Not a qualifying expense if tooth discoloration is simply the result of aging and the whitening is done for cosmetic purposes. If tooth discoloration to the extent of deformity is caused by disease, birth defect or injury the expenses could qualify. A physician s letter of medical necessity would be Not a qualifying expense. A toiletry is used in the process of dressing and grooming oneself. Not a qualifying expense even if dentist recommends special electric or battery-powered to treat a medical condition such as gingivitis. Toothbrushes are used primarily to maintain general health a person would still use one even without the medical condition. Not a qualifying expense even if dentist recommends special type to treat a medical condition like gingivitis. Toothpaste is an item used primarily to maintain general health without a medical condition. Topical creams or other drugs such as fluoride treatment used to treat a dental condition would qualify as long as they are primarily for medical care. A physician s letter of medical necessity would be Not a qualifying expense as these are personal expenses and not expenses for medical care. Costs incurred for transportation to and from work may be medical expenses if the employment itself is explicitly prescribed as therapy to treat a medical condition. Not a qualifying expense as veneers are used primarily for cosmetic purposes. Not a qualifying expense as such however, expense for actual medical treatment (e.g., eye exam) would qualify. Not a qualifying expense generally however, if a camp is a special program that is therapeutic and treats a specific disability the expense might qualify to the extent that. Such expenses might be reimburseable under the Dependent Care FSA. The Reference IRC 105 is to be used as a guide as to what expenses are reimbursable under a health FSA but should recognize that IRS Publication 502 is written to help taxpayers determine what medical expenses can be deducted on Schedule A to the Form 1040, and that some deductible expenses are not reimbursable under a health FSA and vice versa. (Example: health insurance premiums are deductible, but not reimbursable under a health FSA). Also note that a tax deduction is claimed for the year the expense is paid, while reimbursement under a health FSA depends only on when the expense was incurred (time of payment is irrelevant). 9