IRS Confirms FSA Rule on Dietary Supplements and Meal Replacements

November 12, 2007

When is food considered a medical expense? This question was recently posed to the IRS by none other than Rep. John Sarbanes (R-OH).

In Information Letter 2007-0037, the IRS clarified its position on when meal replacements and dietary supplements are considered a legitimate expense for medical care. This comes into play for those seeking a medical expense tax deduction and those seeking reimbursement under a Health FSA.

The IRS observed that sometimes doctors will recommend meal replacements, dietary supplements and special foods as substitutes for foods normally consumed by individuals. Even if the reason is obesity, which can be considered a disease, these items are not reimbursable because they are food substitutes and everyone needs to eat.

Simply put, food is considered a personal item. It is not reimbursable under a Health FSA. Neither is it deductible as a medical expense.

Previously, in Revenue Ruling 2002-19, the IRS stated that expenses related to participation in a weight-loss program, when recommended by a doctor to treat obesity or hypertension, constitutes reimbursable medical care. However, consistent with the recent Information Letter, the IRS made clear that foods purchased as a part of such a program are not reimbursable.

Infinisource has considerable experience adjudicating difficult issues for reimbursement of claims, whether they are under a Health FSA, Dependent Care FSA, Health Reimbursement Arrangement or Transportation Plan. For more information on how we can help you with Flexible Benefits Administration, please contact our Sales Department at 800-799-6385 or solutions@infinisource.net.