IRS Reminder: Companies misrepresenting nutrition, wellness and general health expenses as medical care for FSAs, HSAs and HRAs
Published on March 6th, 2024
The Internal Revenue Service (IRS) issued an alert this week reminding taxpayers and health spending plan administrators that personal expenses for general health and wellness are not considered medical expenses under the tax law.
Some companies claim that notes from doctors based on self-reported health information can convert non-medical food, wellness and exercise expenses into medical expenses, but that is not necessarily true.
As such, employers and TPAs should be wary of these letters and share correct information with their employees about which expenses are deductible or reimbursable under health savings accounts (HSAs), flexible spending accounts (FSAs) and health reimbursement arrangements (HRAs). This will help keep employers in compliance and help employees to be reimbursed as expected.
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.
The IRS encourages taxpayers with questions to review the frequently asked questions on medical expenses related to nutrition, wellness and general health to determine whether a food or wellness expense is a medical expense.
About Alegeus
With more than 25 years of growth and innovation, Alegeus is the market leader in SaaS-based healthcare payment solutions. Our highly flexible, white-label platform powers account-based benefit programs such as HSAs, FSAs, HRAs, COBRA, wellness incentives, lifestyle benefits and beyond. We deliver exceptional user experiences and differentiated capabilities that help our partners strengthen their product offerings, operate more efficiently, and unlock their full growth potential. Our partnerships with the industry’s leading health plans, third-party administrators, financial services and benefit solution providers give Alegeus unparalleled reach in the market. And our unique partnership model empowers our clients to achieve outsized results – growing their programs at a rate that is 2-3X the market, and with the highest net promoter scores (NPS) in the industry. We never compete with our clients – we win when they win. Alegeus is headquartered in Waltham, Mass., with operations centers in Orlando and Bangalore, and a large remote workforce.
