![]() Over-the-Counter (OTC) Drugs. OTC drugs other than insulin are not deductible, but they may be reimbursed by health FSAs, HRAs, and HSAs if substantiation and other requirements are met.įor more information, see EBIA’s Cafeteria Plans manual at Sections XX.D.7 (“Other Guidance Regarding What Is Medical Care: Caution Regarding IRS Publication 502”), XX.D.8 (“Distinguishing Deductibility From Reimbursement of Medical Care Expenses (and Why It Matters)”), and XX.M (“Table of Common Expenses, Showing Whether They Are for ‘Medical Care’”) see also EBIA’s Consumer-Driven Health Care manual at Sections XV.C (“What Is an HSA-Qualified Medical Expense?”) and XXIV.B (“HRAs May Reimburse Only Code § 213(d) Expenses”). ![]() 502 would provide a wrong answer if applied to these tax-favored programs. 502 should not be used as the sole determinant for whether an expense is reimbursable by a health FSA or HRA, or eligible for tax-free distribution from an HSA. Although the rules for deductibility overlap in many respects with the rules governing health FSA, HRA, and HSA reimbursement, there are some important differences. 502 is written largely to help taxpayers determine what medical expenses can be deducted on their income tax returns it is not meant to address the tax-favored programs that you mention. 502) comes the closest, but it should be used with caution. Does such a list exist?ĪNSWER: Unfortunately, no government publication provides this exact information. IRS Publication 502-Medical and Dental Expenses (Pub. QUESTION: We would like to provide our employees with an official, government-approved list of expenses that are eligible for reimbursement by a health FSA or HRA, or for a tax-free distribution from an HSA.
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