Industry Associations to IRS: Expand HSA and FSA to Include Supplements

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Washington, D.C.—Several industry associations have sent the IRS a joint letter expressing the importance of expanding Health Savings Accounts (HSA) and Flexible Spending Accounts (FSA) to include dietary supplements as “medical expenses.”

The letter applauds the portion of the CARES Act which restored the ability to obtain reimbursement from eligible HSAs and FSAs for over the counter medications and expanded coverage for menstrual products. This action, the associations say, “recognizes the importance of personal healthcare products in maintaining a healthy lifestyle.” As such, this is a good time to expand eligibility to dietary supplements, according to the American Herbal Products Association (AHPA), the Consumer Healthcare Products Association (CHPA), the Council for Responsible Nutrition (CRN), and the United Natural Products Alliance (UNPA).

The letter notes that this inclusion would not require legislative action; the IRS can expand the reimbursements by updating an IRS guidance from 20 years ago, IRS Publication 502. The change would allow Americans to be reimbursed from their HSAs and FSAs for dietary supplements, which “would not only encourage Americans to maintain healthy lifestyles and recognize the valuable role that nutritional supplements play in attaining better health, especially in these critical, unprecedented times, it would also free up scarce household resources for other critical needs.”

The trade groups make the argument that dietary supplements already fall under the definition of “medical care”—DSHEA allows dietary supplement manufacturers to lawfully make structure/function claims and the 1990 Nutrition Labeling and Education Act allows supplements to carry health claims regarding reduced risk of disease, satisfying the medical care definition.

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As such, the letter requests that the IRS revise Publication 502 to remove the section on nutritional supplements from the section What Expenses Aren’t Includible? and to add to the section What Medical Expenses Are Includible? the following paragraph:

You can include in medical expenses the cost of dietary supplements, provided that such products are labeled with Supplement Facts labels that are compliant with federal regulations for these products.

Such a revision would “modernize the treatment of nutritional supplements by the IRS to recognize the contributions of these products to the better health of Americans,” the letter says, “and it could provide American families with much-needed additional resources during this critical economic time.”

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