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 What expenses can be reimbursed?
Whose expenses can be reimbursed?
Ineligible Expenses
Ineligible Receipts
Alphabetical List of Covered and Not Covered Items
Capital Expenses
What expenses can be reimbursed?
FSA and HSA: A health care FSA or HSA can only be used to reimburse health care expenses that qualify under Section 213** of the federal tax code. If an expense is not reimbursable under Section 213, it cannot be reimbursed by an FSA or HSA.
HRA: Your employer, not the federal tax code, determines which health care expenses are eligible under an HRA. Please check with your Human Resources department for a full list of expenses covered by your HRA.
Whose expenses can be reimbursed?
FSA and HSA: You can use funds to pay qualified health care expenses incurred by the employee, spouse, or a dependent for whom an exemption is claimed under Section 152 of the tax code.
HRA: Only employees and their dependents enrolled in the HRA may use HRA funds to pay qualified health care expenses.
** Qualified health care expenses as defined by Section 213 include amounts paid for the diagnosis, treatment, or prevention of disease, and for treatments affecting any part or function of the body. The expenses must be to alleviate or prevent a physical defect or illness. Expenses for solely cosmetic reasons generally are not expenses for medical care. Examples include face lifts, hair transplants, and hair removal (electrolysis). Also, expenses that are merely beneficial to one's general health (for example, vacations) are not expenses for medical care.
The following guidelines relate to expenses currently allowed and not allowed by the Internal Revenue Service as deductible medical expenses. This list is not necessarily inclusive or exclusive. It is based on Kazdon's interpretation of IRC Section 213 and is not intended to be legal advice.
Please note that the list is subject to change based on regulations, revenue rulings and case law. The list is intended only as a general guideline for covered expenses. All items on the list may be subject to further restriction.
Questions regarding reimbursable health care expenses should be referred to a tax consultant.
Ineligible Expenses
The following expenses are not eligible for reimbursement under a Health FSA, HRA or HSA:
• Annual medical contract fees for exclusive provider care
• Arch supports, knee wrist braces (unless prescribed for a specific medical condition)
• Breast pumps (unless medically required to care for a premature infant)
• Blood pressure machines (unless prescribed by a physician as medically required for constant monitoring of blood pressure due to a medical condition)
• Cosmetic surgery
• Dental bleaching or any other teeth whitening
• Domestic help fees (for services of a non-medical nature)
• Electric toothbrushes replacement brushes
• Electrolysis or hair removal
• Hair transplant
• Health club dues/memberships (unless part of a medically prescribed regimen to treat a specific condition)
• Humidifiers (unless prescribed by a physician to treat a specific medical condition)
• Insurance premiums of any kind (see below exceptions for HRA and HSA)
• Laetrile, even if prescribed by a doctor, is not reimbursable.
• Lens replacement insurance
• Marijuana, even if prescribed for medicinal purposes, is not reimbursable.
• Massage therapy (unless prescribed by a physician to treat an injury or trauma, or for rehabilitative purposes)
• Over the counter items which are items not categorized as a medicine or drug and may include, but are not limited to, hot pads, support pillows, bandages, ACE wraps, nail clippers, pumice stones, feminine hygiene products, etc. are not reimbursable (unless used to treat a specific medical condition). Over-the-counter toiletries or personal hygiene items which may include, but are not limited to shampoo, toothpaste, conditioners, hand creams, deodorant, shaving cream, razors, dental floss, body powders, hair gels/sprays, make-up, nail polish accessories, soap, mouthwash, etc. are not reimbursable.
• Physical therapy treatments for general well-being
• Supplements - The cost of supplements taken for general well-being are not reimbursable. However, the cost of supplements taken to alleviate a specific medical condition is reimbursable. A physician should substantiate the diagnosis of a specific medical condition and acknowledge that the supplement being used alleviates the medical condition diagnosed.
• Tuition for special schools (unless it is a special school to treat a specific condition such as blindness, speech, etc.)
• Union dues
• Vitamins - Daily multi-vitamins taken for general well-being are not reimbursable. Vitamins taken to treat a specific medical condition are reimbursable. A diagnosis of the medical condition should accompany the vitamin claim. Prenatal vitamins obtained by prescription are reimbursable.
• Weight loss machines See Exercise Equipment.
Ineligible Receipts
in addition, the following are not acceptable receipts:
• Bankcard statements
• Canceled checks
• Charges submitted that are illegible
• Estimates of expenses (A statement is required showing date of service and type of medical expense.)
• Statement balances and/or balance forwards are never acceptable.
Capital Expenses
Medical expenses incurred by employees for special equipment installed in the home or for improvements are reimbursable if their main purpose is medical care. Under Code Section 213, the cost of permanent improvements that increase the value of the property may be partly deducted as a medical expense. The cost of the improvement is reduced by the increase in the value of the property; the difference is a deductible medical expense.
If the value of the property is not increased by the improvement, the entire cost is deductible as a medical expense. Improvements made to accommodate a residence for a person's disability do not usually increase the value of the residence, and the full cost is usually reimbursable. Only reasonable costs to accommodate a personal residence to a disabled condition are considered medical care. Additional costs for personal motives, such as for architectural or aesthetic reasons, are not reimbursable.
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