The IRS Provides Guidance On Medical Expense Deductions

Cassidy Jakovickas

May 15, 2024

The IRS has issued new FAQs on its website that address whether certain costs related to nutrition, wellness, and general health are classified as medical expenses under IRC Section 213. Expenses classified as medical expenses under Section 213 can be paid or reimbursed by a health savings account, Health flexible spending arrangement (HSA), Archer medical savings account (MSA), health reimbursement arrangement (HRA), or deducted as an itemized deduction on Schedule A. 

Which medical expenses can be deducted?

If any amount is paid or reimbursed under an HSA, FSA, Archer MSA, or HRA, you cannot also deduct the amount as a medical expense. Expenses classified as medical expenses under Section 213 include those that are paid for the diagnosis, cure, mitigation, treatment, or prevention of disease, affecting any part or function of the body, as well as the cost of prescription medicine and drugs. Medical expenses don’t include expenses that are only beneficial to general health.

The cost of programs to treat drug-related substance abuse and alcohol abuse and smoking cessation programs are all deductible as medical expenses under Section 213. Payments for therapists, either physical or mental, are deductible if paid for the treatment, diagnosis, or prevention of disease. So, an amount paid for therapy to treat a diagnosed mental illness is classified as a medical expense, but marital counseling is not.

The costs of nutritional counseling and weight loss programs are classified as medical expenses, but only if they treat a specific disease diagnosed by a physician, like obesity or diabetes. A gym membership can be deductible, but only if purchased as part of a prescribed plan for physical therapy to treat an injury, obesity, hypertension, heart disease, or other condition.

Which medical expenses are not deductible?

Over-the-counter drugs and medicine are not deductible as a medical expense, except insulin. But HSA, FSA, Archer MSA, and HRA funds can be used to pay for or reimburse you for over-the-counter drugs. The IRS’s FAQs also address deducting nutritional supplements and certain weight loss foods.

Clarity on medical expense deductions while outside the U.S.

Regarding the concept of medical tourism, or traveling abroad to access certain medical procedures that may be unavailable in the US or not yet approved, these costs can be deductible if the trip is primarily for, and essential to, receiving medical services. If you go abroad for medical services, you are subject to the same rules as taxpayers who receive medical treatment within the United States.

While receiving medical treatment outside the United States, you can deduct transportation costs, including amounts paid for trains, buses, cabs, airplanes, or an ambulance, and they may be able to include up to $50 for each night for each person for lodging, including lodging for a person traveling with the person receiving the medical care.

Meals are not included unless they’re part of the cost of lodging at a hospital or similar institution. But keep in mind that Section 213 specifically excludes a deduction for cosmetic surgery or other similar procedures unless the surgery is necessary to address a deformity arising from an injury or disease.

The cost of lodging not provided in a hospital or similar institution may be deductible if:

  • The lodging is primarily for and essential to medical care.
  • The medical care is provided by a doctor in a licensed hospital or in a medical care facility that is equivalent or related to a licensed hospital.
  • The lodging isn’t extravagant under the circumstances.
  • There is no significant element of personal pleasure, recreation, or vacation in the travel away from home.

For more information, refer to IR-2023-47 on the IRS website.