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Weight-Loss Programs For Obesity May Be Tax Deductible Or A Reimbursable Expense Under Section 125 Plans
On April 2, the Internal Revenue Service recognized obesity as a disease and announced that taxpayers may deduct the cost of weight-loss programs (but not of diet foods) on their income tax returns.
The IRS said that for the taxpayer's cost to be deductible as a medical expense, a physician must diagnose the obesity and prescribe the weight-loss program as a treatment. If the taxpayer pays for a weight-loss program to improve "general health" or appearance, that cost is not deductible. Taxpayers may deduct qualifying medical expenses when such expenses exceed 7.5 percent of their adjusted gross income. Taxpayers can file amended returns if they qualify for the deduction. Generally a person may amend a return for three years after the due date.
What Is Obesity?
The National Heart, Lung and Blood Institute says a person with a Body Mass Index (BMI) of 30 or more is obese. To calculate BMI, go to http://www.nhlbi.nih.gov/health/public/heart/obesity/lose_wt/risk.htm.
Effect On Section 125 Plan Eligible Expenses
According to the new IRS ruling, Section 125 plan participants, who participate in weight-loss programs prescribed by a physician as treatment for obesity, can be reimbursed for their expenses through their health care expense account. BenefitPort Administrators will be asking for proper substantiation from the employee's physician.
This ruling does not allow for a change in election amount mid-plan year.
No Double Dipping
Taxpayers can claim an income tax deduction or be reimbursed under their Section 125 plan for their medically prescribed weight loss program - but not both.
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