Your Health Savings Account or Flex Spending Account is a great way to keep healthcare costs down. Did you know GlutenTox Home kits are a Qualified Expense?
Today’s post is all about Health Savings Accounts, Health Reimbursement Agreements, and Flex Spending Accounts (HSA, HRA, FSA). Did you know that GlutenTox Home is a Qualified Medical Expense for account-holders, provided they have a medically-diagnosed need for a gluten-free diet (eg, celiac disease)? Your first step, of course, is to make sure that you have written verification of your diagnosis.
These three different kinds of pre-tax savings accounts allows you to use pre-tax dollars to cover a range of medical expenses (anything from contact lenses to pregnancy tests to dentist visits to lab fees). Because many accounts have a use-it-or-lose-it rule, the end of the year is a great time for people to stock up on qualified supplies.
If you don’t have an account but do pay a fair amount of out-of-pocket medical expenses, it may be worth doing some exploring to see if your insurance plan is compatible. For 2017 (and 2018) the threshold for medical expenses has been restored to 7.5%. (Update: in 2019, the threshold was increased to 10% AGI.)
Following are the definitions from the IRS’ publication 969 for Health Savings Accounts and other tax-favored health plans:
A health flexible spending arrangement (FSA) allows employees to be reimbursed for medical expenses. FSAs are usually funded through voluntary salary reduction agreements with your employer. No employment or federal income taxes are deducted from your contribution. The employer may also contribute.
A health reimbursement arrangement (HRA) must be funded solely by an employer. The contribution cannot be paid through a voluntary salary reduction agreement on the part of an employee. Employees are reimbursed tax free for qualified medical expenses up to a maximum dollar amount for a coverage period. An HRA may be offered with other health plans, including FSAs.
A health savings account (HSA) is a tax-exempt trust or custodial account that you set up with a qualified HSA trustee to pay or reimburse certain medical expenses you incur. You must be an eligible individual to qualify for an HSA.
Of course, there are more differences, including requirements for eligibility and restrictions on qualifying expenses. These are well-covered in the publication; be sure to read it carefully.
In the IRS guidelines, Publication 502, the general rule is to count, “costs of diagnosis, cure, mitigation, treatment, or prevention of disease,” including, “the costs of equipment, supplies, and diagnostic devices needed for these purposes.”
To confirm this, we emailed the IRS. A partial excerpt from their reply
Medical care expenses must be primarily to alleviate or prevent a physical or mental defect or illness. They do not include expenses that are merely beneficial to general health, such as vitamins or a vacation.
We assume that the taxpayers are using the GlutenTox Home product to determine the gluten content in their food and drink in order to mitigate their celiac disease…
If the above requirements are met, then the taxpayers are eligible to deduct the expenses they paid for the GlutenTox Home product…
As stated above, taxpayers who use this product to maintain a gluten-free diet that is merely beneficial to general health cannot deduct these expenses.
If the taxpayer’s return is selected for review by the Internal Revenue Service, they would need to provide a written statement from a physician certifying that the taxpayer has celiac disease and can use this product to maintain a gluten-free diet.
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