Health flexible spending accounts (FSAs) and health savings accounts (HSAs) are tax-advantaged accounts that can be used to pay out-of-pocket costs for qualified medical expenses that are not covered by a health plan. Qualified medical expenses must be incurred primarily to alleviate or prevent a physical or mental defect or illness. Expenses that are merely beneficial to general health are not qualified medical expenses.

Do FSA or HSA cover weight loss medication?

• Health FSAs and HSAs cannot be used to pay for weight loss programs and drugs if the purpose of the weight loss is for aesthetics, general health, or sense of well-being.
• It may be eligible, though, if the weight loss medication or program is a treatment for a specific disease that is diagnosed by a physician, such as obesity or diabetes, these items may be paid for by an HSA or health FSA. Often, this includes obtaining a Letter of Medical Necessity (LMN) from your physician to obtain eligibility.

When can weight-loss expenses qualify for HSA or FSA reimbursement?

In general, weight loss programs and drugs are not qualified medical expenses if the purpose of the weight loss is the improvement of appearance, general health, or sense of well-being.

However, if the weight loss is a treatment for a specific disease diagnosed by a physician, these costs may be considered medically necessary and qualified medical expenses that can be reimbursed tax-free through an HSA. A health FSA may also pay or reimburse these costs, depending on the plan’s rules concerning eligible expenses.

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What is a letter of medical necessity?

A letter of medical necessity (LMN or LOMN) is a written letter or statement from a physician that details the reasons and conditions why an individual would need to be prescribed a specific medication or program to treat a diagnosed medical condition.

When approaching the eligibility process or reimbursement process, many FSAs require a LMN to approve the expense reimbursement. HSAs are less direct in their approval, but you’ll need to keep that LMN on hand after you submit your reimbursement request to prove the expense was eligible in the event of an audit.

What eligible weight-loss expenses are covered by an HSA or FSA?

The following weight loss expenses are types of qualified medical expenses that a health FSA or an HSA may reimburse:

• Weight loss drugs that are prescribed for a medical condition.
• Weight loss counseling or membership in a weight loss group when recommended by a physician to treat a medical condition.

Qualified medical expenses do not include membership dues for a gym, health club, or spa, but they may include separate fees charged for weight loss activities if the treatment is for a specific disease diagnosed by a physician. As mentioned above, membership dues or weight-loss programs also don’t inherently qualify for reimbursement through HSA or FSA, unless deemed medically necessary by a physician for a diagnosed medical condition, as stated in a letter of medical necessity.

Also, the extra cost of diet food or beverages is not a qualified medical expense that can be reimbursed by a health FSA or HSA on a tax-free basis unless the food or beverage does not satisfy normal nutritional needs and is needed to alleviate or treat an illness (as substantiated by a physician).

Resources

• IRS FAQs on medical expenses related to general health, nutrition, and wellness.
• Publication 502, Medical and Dental Expenses
• Publication 969, Health Savings Accounts and Other Tax-Favored Health Plans

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Provided to you by Christensen Group Insurance. This Compliance Snapshot is not intended to be exhaustive nor should any discussion or opinions be construed as legal advice. Readers should contact legal counsel for legal advice. © 2023 Zywave, Inc. All rights reserved.