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Employee Benefits Bulletin, April 2002TIDBITS, TRICKS & TRAPS: NEWS FOR HEALTH FSA PARTICIPANTS . . . SOME WEIGHT LOSS PROGRAM EXPENSES DEDUCTIBLEAs stated in the "New Guidance" section of this newsletter, the IRS recently issued Revenue Ruling 2002-19, which creates a new rule for deductibility of weight loss programs under Code §213. Code §213 allows a tax deduction for certain unreimbursed medical expenses if those expenses are greater than 7.5% of an individual's adjusted gross income. With a few exceptions (discussed in the Jan/Feb 2002 issue of the Employee Benefits Bulletin), items deductible under §213 are also reimbursable by a Health Flexible Spending Account ("FSA"). Because of the 7.5% floor requirement for tax deductions, Health FSA participants will probably benefit the most from the new rule. The following individuals are eligible for the deduction under the new rule: (1) those who are diagnosed as obese by their physician (there is a medical standard for obesity based upon height and weight) , or (2) those who are diagnosed with another disease where the doctor prescribes weight loss as treatment. Eligible individuals may deduct the initial joining fee of a weight loss program, as well as the additional fees charged to attend periodic meetings (as long as the individual has not been reimbursed for these amounts). The cost of diet food purchased through a weight loss program is NOT deductible. Expenses of gym memberships and personal trainers were not addressed in the ruling, however, they might be deductible by eligible individuals if prescribed specifically by the physician. Back to Newsletter home |
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