What Weight-Loss Items Are HSA- or FSA-Eligible Expenses?
Key takeaways:
A health savings account (HSA) and flexible spending account (FSA) are tax-advantaged vehicles that may be used to cover qualified healthcare expenses like weight-loss services and products.
A recommendation from a licensed physician is needed to withdraw funds from your HSA or FSA for a weight-loss program.
Failure to have the correct documentation makes your HSA distribution taxable.
The U.S. spent a record $78 billion in the weight-loss industry in 2019. Some of those expenses may have been paid for using a flexible spending account (FSA) or health savings accounts (HSA). If your doctor recommends you lose weight to treat a specific illness, you may be eligible to use your HSA or FSA to pay for part of your weight-loss journey.
Below, we’ll explain how the accounts work, what items are eligible, and what documentation you need.
How does HSA work?
You can contribute pretax funds to a health savings account (HSA). Only individuals with a high-deductible health plan (HDHP) can open an HSA. You own the account, and the money in it is yours whether you switch jobs or stop working.
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The HSA funds pay for eligible healthcare expenses or reimburse you when you pay for them out of pocket. If you do not use the funds in your account before the end of the year, they will roll over into the next year. Your total FSA funds, on the other hand, do not roll over every year. This is one major difference between an HSA and FSA.
How does FSA work?
Employers own flexible spending accounts (FSAs). An employer, employee, or a combination of both can contribute to the account. The employer pre-funds the account based on the amount that the employee chose to contribute. The employee chooses this amount during open enrollment season, before the year begins. Then pre-tax contributions come from payroll to pay the employer back.
For example, Brandon has a $1,000 expense for a weight-loss program he began in January. He can still receive $1,000 from his FSA because his employer pre-funded his account. He is not limited to the amount of his payroll deductions made so far in the year.
A healthcare FSA is not connected to your health insurance plan. It covers the cost of eligible out-of-pocket healthcare expenses that are not reimbursed by your insurance provider or employer. You typically lose the funds in your FSA if they are not used by the end of the year. Some companies offer a grace period or carry-over option to give you more time to use your unused funds. It is up to the company whether they want to offer this option to their employees.
What qualifies as an HSA/FSA eligible expense?
HSA- and healthcare FSA-eligible expenses relieve or prevent physical or mental disability or illness. This includes out-of-pocket costs like copays, medical deductibles, and medical screenings. The Internal Revenue Service (IRS) Publication 502 outlines HSA- and FSA-eligible expenses. You can also check with your account administrator to confirm if an expense is eligible.
A doctor’s recommendation can turn an ineligible expense into an eligible one. An example is weight loss. Items for weight loss are not usually HSA- or FSA-eligible if they are for general wellness. However, your doctor may suggest weight loss for the following conditions:
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Your licensed physician will need to write a letter of medical necessity (LOMN). This will make part of your weight-loss journey tax-deductible. The LOMN will outline your medical condition and why weight loss is necessary. Your physician can recommend weight-loss programs, supplements, or exercise equipment.
For example: Linda visits her doctor because she is having back pain and PCOS flare-ups. She finds out she is also at risk of having Type 2 diabetes. Her doctor prescribes metformin and a yoga class to aid in preventative care. The doctor also writes a LOMN.
Metformin is an early treatment of Type 2 diabetes and PCOS. It may even help with weight loss. This medication is not covered by insurance but becomes eligible once a doctor writes an LOMN. Doctors may also recommend yoga for back pain. However, it is not an eligible expense until they write an LOMN.
What weight-loss items are HSA- or FSA-eligible?
Healthcare expenses beneficial to general health and wellness are not HSA- or FSA-eligible. This would include things like a gym membership, meal prep, or diet pills. What determines eligibility as a covered item under an FSA/HSA is your doctor’s recommendation to treat a condition.
Some eligible HSA and FSA items with a LOMN would include:
Dietician services
Diet pills
Doctor-recommended weight-loss programs (see examples below)
Exercise equipment (barbells, elliptical, stationary bike, or treadmill)
Fitness tracker (COROS, Fitbit, Garmin, Huawei, or Whoop)
Gastric bypass surgery
Measuring tape
Nutritionist services
Pilates
Weight scale
Yoga
Always confirm with your account administrator that these expenses are eligible before purchasing. Your expense eligibility may depend on the rules outlined by your FSA/HSA administrator.
What about weight-loss programs?
Some weight-loss programs are also HSA- and FSA-eligible if deemed necessary by your doctor. You will need to get an LOMN from them when they recommend weight loss for your medical condition.
Once you have your LOMN, you may be able to sign up for some weight-loss programs. The table below shows some of the programs you may be eligible to use after contacting your HSA administrator and providing your LOMN.
| Weight-loss program/product | HSA/FSA eligible? | What is covered? |
|---|---|---|
| Calibrate | Yes | One-year metabolic reset, GLP-1s |
| Jenny Craig | Yes | Program plan |
| Noom | Yes | Program plan |
| Nutrisystem | Yes | Program Plan |
| Optavia | Yes | Exercise and nutrition program |
| SlimFast | No | N/A |
| Weight Watchers | Yes | Program, membership, workshop, and coaching |
What weight-loss items are NOT HSA/FSA eligible?
There is often a gray area when it comes to determining whether an item is for general health and wellness. This is why it is important to get your doctor’s prescription and recommendation on paper.
Some things may not be HSA- or FSA-eligible even if they do come highly recommended by your doctor. These things are:
Gym membership
Diet and organic foods
Beverages like SlimFast, Boost, and Herbalife
Spa and health-club memberships
These items across the board generally are not eligible. However, if your doctor outlines in their LOMN how it will treat the specific medical condition, it may become eligible. Always confirm the eligibility with your account administrator.
If an item is HSA/FSA eligible, how do I redeem my benefits?
You can redeem your benefits by using your HSA or FSA card to buy the item. If you do not have a card, you can make a claim for reimbursement after you pay for the expense out of pocket. A LOMN may be necessary for your HSA/FSA administrator to approve expenses. It is best practice to keep your receipts and LOMN to ensure you get reimbursed if you pay out of pocket.
How can I check if an item is eligible as a HSA/FSA expense?
You can check to see if an item is an eligible FSA/HSA expense by referring to your account administrator’s website. If there is any confusion, you should reach out to them directly to confirm an item's eligibility.
Do I need to worry about HSA or FSA expenses when it comes time to do my taxes?
Distributions for approved HSA expenses are not taxed. You will pay taxes on the distribution if you buy something other than approved expenses. If you are under 65 years old, you will also face a 20% tax penalty. There is no tax penalty for an FSA in the same scenario, but your employer may ask you to pay the funds back to them.
What’s the difference between HSA eligibility and tax deductible?
If an item is HSA-eligible, you can withdraw money from your HSA to pay for the expense. The item must be considered a qualified medical expense in order to be HSA-eligible.
Every year, you have an opportunity to contribute pretax funds to your HSA, so long as you meet the requirements. The money that you contribute to your HSA is not taxed. If you use after-tax dollars to fund your account, you can claim a deduction on your tax return. A tax deduction reduces the amount that you pay taxes on. You can withdraw money from your account — 100% tax-free — to pay for qualified medical expense
The bottom line
You can lose weight and save money on your taxes at the same time. Contact your HSA administrator before you choose a weight-loss program. Obtain a LOMN from your doctor and keep track of receipts to back up your expenses. Otherwise, you may have to repay funds to your employer if you have an FSA. You could face a tax penalty if you use your HSA to pay for nonqualified weight-loss items.
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References
Internal Revenue Service. (2021). 2020 Publication 502.
Internal Revenue Service. (2021). 26 CFR 601.602 - Tax forms and instructions. § 601.602.
Internal Revenue Service. (2021). Publication 969 (2020), Health Savings Accounts and Other Tax-Favored Health Plans.
Johns Hopkins University. (2021). Metformin.
Market Data. (2021). The U.S. Weight Loss & Diet Control Market Report.
This article is solely for informational purposes. This article is not professional advice concerning insurance, financial, accounting, tax, or legal matters. All content herein is provided “as is” without any representations or warranties, express or implied. Always consult an appropriate professional when you have specific questions about any insurance, financial, or legal matter.
