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New IRS Rules Affect Celiac Disease Expense Reimbursement

Supplements Need Prescription, But Gluten-Free Food Does Not

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Updated October 23, 2011

New rules that took effect in 2011 for Health Savings Accounts (HSAs), employer-sponsored Health Reimbursement Arrangements (HRAs) and Health Flexible Spending Arrangements (health FSAs) will affect some people with celiac disease who use those accounts to pay for supplements intended to treat nutritional deficiencies.

Beginning Jan. 1, you'll only be able to purchase vitamins and supplements through any of these accounts if you have a doctor's prescription for them, according to the Internal Revenue Service. Previously, you could use the accounts to pay for any nutritional supplements you wanted, even if your doctor hadn't prescribed them.

The changes result from one section of the Affordable Care Act, a.k.a. the mammoth health reform legislation signed into law last March. The section establishes a new, uniform standard for medical expenses, requiring your doctor to sign off on all medicines, supplements or drugs purchased through your health savings or flexible spending account.

HRAs and health FSAs are accounts your employer sets up to pay certain medical and health-related expenses. FSAs usually are funded through automatic salary deductions, and the money is tax-free. HRAs, meanwhile, are funded solely by your employer.

Health Savings Accounts, meanwhile, are health-related spending accounts coupled to high-deductible insurance policies. Both individuals and employers can set up and fund HSAs.

Celiacs Use HSAs, FSAs and HRAs to Help Pay for Supplements, Gluten-Free Food

It's relatively common for people with diagnosed celiac disease use the money in their HSAs, FSAs or HRAs to help pay for vitamins and other supplements. Others use the funds to pay the cost difference between gluten-filled and gluten-free food. IRS rules also state that you can deduct the cost difference from your taxes, but only the amount that exceeds 7.5% of your total income.

The new rules on health savings accounts, flexible spending accounts and health reimbursement accounts won't affect you if you only use the money to help offset the higher cost of gluten-free foods.

But if you regularly use nutritional supplements (as many celiacs do), you'll need to obtain a doctor's prescription for those supplements in order to be reimbursed for them through your HSA, FSA or HRA account.

That doesn't mean you can't buy over-the-counter supplements. You simply need proof (in the form of a prescription pad note from your doctor) that they're necessary to treat your condition.

The changes mandated by the Affordable Care Act don't affect many other expenses people with celiac disease might incur. For example, the new rules don't affect insulin, even if it's purchased without a prescription, nor do they affect other health care expenses, including glasses and contact lenses, according to the Internal Revenue Service. They also don't affect supplements purchased up to Dec. 31, 2010, even if you submit the forms to be reimbursed in 2011.

Sources:

Affordable Care Act: Questions and Answers on Over-the-Counter Medicines and Drugs. Internal Revenue Service, accessed Oct. 27, 2010.

Health Savings Accounts and Other Tax-Favored Health Plans. Internal Revenue Services, accessed Oct. 27, 2010.

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