If you were planning to take a tax deduction or be reimbursed for your gym membership or new health food supplement, the IRS has news for you.
“Some companies are misrepresenting the circumstances under which food and wellness expenses can be paid or reimbursed under FSAs and other health spending plans,’’ says a recent IRS Newswire release.
IRS Commissioner Danny Werfel said these companies use aggressive marketing to dupe the public.
“(They) suggest that personal expenditures on things like food for weight loss qualify for reimbursement when they don’t qualify as medical expenses,’’ Werfel said in the release.
The IRS says personal expenses for toning up or slimming down for non-medical reasons are not reimbursable or deductible under health flexible spending arrangements, health savings accounts, health reimbursement arrangements, or medical savings accounts (FSAs, HSAs, HRAs, MSAs.).
Medical expenses must be primarily to alleviate or prevent a physical or mental disability or illness. Only if your gym membership was purchased for treating a specific disease diagnosed by a physician, such as obesity, hypertension or heart disease, is the cost deductible or reimbursable.
“Otherwise, the cost of a gym membership is for the general health of the individual and is not a medical expense,’’ says the IRS.
What to Watch For
A typical health-related food scam works like this, the IRS says: For a fee, a company will provide a doctor’s note that promises the consumer will be reimbursed or can claim a tax deduction for the purchase of non-medical food, wellness and exercise expenses.
In the IRS example, a diabetic patient sees an advertisement saying that he can use pre-tax dollars from his FSA to purchase healthy food if he contacts that company.
“However, when he submits the expense with the ‘doctor’s note,’ the claim is denied because food is not a medical expense and plan administrators are wary of claims that could invalidate their plans,’’ the IRS says.
“FSAs and other health spending plans that pay for, or reimburse, non-medical expenses are not qualified plans. If the plan is not qualified, all payments made to taxpayers under the plan, even reimbursements for actual medical expenses, are includible in income,’’ says the IRS.
The IRS defines medical expenses as the costs of diagnosis, cure, mitigation, treatment, or prevention of disease, and for the purpose of affecting any part or function of the body.
These expenses include payments for legal medical services rendered by physicians, surgeons, dentists and other medical practitioners. They include the costs of equipment, supplies and diagnostic devices needed for these purposes. Also included are the costs of medicines and drugs prescribed by a physician.
“Legitimate medical expenses have an important place in the tax law that allows for reimbursements,’’ said Werfel. “But taxpayers should be careful to follow the rules.’’
The IRS encourages taxpayers to review its frequently asked questions on medical expenses concerning nutrition, wellness and general health.
