IRS Publication 502, Medical and Dental Expenses, defines medical care for the purpose of deducting medical expenses and reimbursing medical expenses through programs such as HSAs and HRAs. Health Reimbursement Arrangements, or HRAs, are defined contribution plans through which employers can reimburse their employees for eligible medical expenses.
An HRA may reimburse expenses considered to be qualified medical expenses in IRS Publication 502, including premiums for qualified health insurance policies. This is outlined in IRS Publication 969.
Depending on the HRA plan a business offers, these benefits may vary. Generally, the company will specify which IRS-approved medical expenses are excluded from the plan. These should be listed in the employer's HRA plan document.
Through a Small Business HRA, however, a company provides reimbursement for all of the medical expenses listed in IRS Publication 502.
IRS Publication 502—Definition of Medical Expenses
IRS Publication 502 defines medical care for the purpose of deducting or reimbursing expenses.
According to the IRS, the definition of medical care is as follows:
(1) The term “medical care” means amounts paid—
A. For the diagnosis, cure, mitigation, treatment, or prevention of disease, or for the purpose of affecting any structure or function of the body,
B. For transportation primarily for and essential to medical care referred to sub-paragraph (A),
C. For qualified long-term care services (as defined in section 7702B (c)), or
D. For insurance (including amounts paid as premiums under part B of title XVIII of the Social Security Act, relating to supplementary medical insurance for the aged) covering medical care referred to in sub-paragraphs (A) and (B) or for any qualified long-term care insurance contract (as defined in section 7702B (b)).
List of HRA eligible expenses
- Annual physical exam
- Artificial limb
- Birth control pills
- Body scan (for diagnostic testing)
- Braille books and magazines
- Breast pumps and supplies (lactation expenses)
- Breast reconstruction post-mastectomy
- Capital expenses to modify your home for a disability
- Christian Science practitioner
- Contact lenses (and solution)
- Dental treatment (except teeth whitening)
- Diagnostic devices (such as diabetes test kits)
- Disabled dependent care expenses
- Eye exam
- Eye surgery (vision correction)
- Fertility enhancement
- Guide dog (or other service animal)
- Health institute
- Hearing aids
- Hearing-impaired telephone
- Hearing-impaired television modifications
- Inpatient hospital services
- Insurance premiums
- Intellectually and developmentally disabled housing
- Laboratory fees
- Lead-based paint removal
- Legal fees for medical expenses
- Lifetime care, advance payments
- Lodging for medical treatment
- Long-term care
- Meals (while receiving medical treatment at facility)
- Medical conferences
- Medical information plan
- Nursing home
- Nursing services
- Operations (for medically necessary reasons)
- Oxygen (necessary for medical condition)
- Pregnancy test kits
- Psychiatric care
- Smoking cessation programs (and prescriptions)
- Special education
- Substance abuse treatment (drug or alcohol)
- Transportation (during medical treatments)
- Trips (to receive medical treatments)
- Tuition for special education
- Weight-loss program
IRS Publication 502 also provides a complete list of eligible and ineligible medical expenses.
Editor's note: This post was originally published August 2013.
What questions do you have about which medical expenses can be reimbursed? Let us know in the comments section below.