Unlock the Truth: Can Your HSA Cover Weight Loss Surgery? Find Out Now!

Health Savings Accounts (HSAs) and Flexible Spending Accounts (FSAs) are tax-advantaged accounts designed to cover out-of-pocket costs for qualified medical expenses not covered by your health plan. Understanding whether weight loss surgery qualifies under these accounts can help you manage your healthcare expenses effectively.

Understanding HSAs and FSAs

Health Flexible Spending Accounts (FSAs) and Health Savings Accounts (HSAs) are tax-advantaged accounts that can be used to pay out-of-pocket costs for qualified medical expenses that are not covered by a health plan. Qualified medical expenses must be incurred primarily to alleviate or prevent a physical or mental defect or illness. Expenses that are merely beneficial to general health are not qualified medical expenses.

General Rules for Weight Loss Expenses

In general, weight loss programs and drugs are not qualified medical expenses if the purpose of the weight loss is the improvement of appearance, general health, or sense of well-being. However, if the weight loss is a treatment for a specific disease diagnosed by a physician (e.g., obesity, diabetes, hypertension, or heart disease), these costs may be considered qualified medical expenses that can be reimbursed tax-free through an HSA. A health FSA may also pay or reimburse these costs, depending on the plan’s rules concerning eligible expenses.

Qualified Weight Loss Expenses

The following weight loss expenses are types of qualified medical expenses that a health FSA or an HSA may reimburse:

Weight loss drugs that are prescribed for a medical condition.
Weight loss counseling or membership in a weight loss group when recommended by a physician to treat a medical condition.

Qualified medical expenses do not include membership dues for a gym, health club, or spa, but they may include separate fees charged for weight loss activities if the treatment is for a specific disease diagnosed by a physician. Also, the extra cost of diet food or beverages is not a qualified medical expense that can be reimbursed by a health FSA or HSA on a tax-free basis unless the food or beverage does not satisfy normal nutritional needs and is needed to alleviate or treat an illness (as substantiated by a physician).

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Weight Loss Surgery and HSA/FSA Eligibility

Yes, most bariatric surgeries are HSA or FSA eligible if certain requirements are met. Bariatric surgery, such as Gastric Sleeve, Gastric Bypass or SADI-S, is considered a qualified medical expense under IRS guidelines, meaning it is eligible for payment or reimbursement through your FSA, HSA, or HRA. These procedures change the stomach and small intestine to limit food intake, improve digestion, and boost metabolism. To qualify as an eligible expense, the surgery must be deemed medically necessary by a healthcare professional to treat a specific diagnosed condition, such as morbid obesity or obesity-related health problems like type 2 diabetes or hypertension.

Common Types of Bariatric Surgery

Common types of bariatric surgery include:

Gastric bypass (Roux-en-Y)
Sleeve gastrectomy
Laparoscopic adjustable gastric banding

Using Your FSA for Bariatric Surgery

If you have an FSA, you can use the funds to pay for pre-surgery consultations, the surgery itself, post-operative care, and any other related medical expenses.

Using Your HSA for Bariatric Surgery

HSAs offer even more flexibility since the funds roll over year to year, and you can contribute up to a certain limit annually. The 2024 contribution limits for Health Savings Accounts (HSAs) are $4,150 for self-only coverage and $8,300 for family coverage. Individuals who are 55 and older can contribute an additional $1,000 as a catch-up contribution. You can use your HSA to cover the full spectrum of bariatric surgery expenses.

Using Your HRA for Bariatric Surgery

If your employer offers an HRA, you can be reimbursed for bariatric surgery costs, including surgery, hospital stays, and any necessary medications.

Letter of Medical Necessity (LOMN)

If you want to use your tax-advantaged health account to pay for weight-loss items, you may need a letter of medical necessity (LOMN) from a healthcare professional. An LOMN includes your diagnosis, the recommended treatment, and how it could help manage or improve your condition. An LOMN is a written statement from a healthcare professional explaining why a specific product or service is needed to treat a diagnosed medical condition. It includes your diagnosis, the recommended treatment, and how it will help manage or improve your condition. Many FSA administrators require an LOMN before approving reimbursement for weight-loss expenses. If you have an HSA, you'll need to keep the document to prove your expense is eligible in case you are audited.

Weight-Loss Programs

According to the IRS, the cost of a weight-loss program is an eligible medical expense for an HSA or an FSA if the program is prescribed to treat a specific condition diagnosed by a healthcare professional. These conditions can include obesity, diabetes, hypertension, or heart disease. If it's for general wellness or appearance, it's not eligible.

To qualify, you'll need an LOMN from a healthcare professional that states your diagnosis, explains why weight loss is medically necessary, and specifies the program recommended. Once you have your LOMN, you may be able to sign up for weight-loss programs.

Weight-Loss Medications and HSA/FSA Eligibility

You may be able to use your HSA or FSA to pay for weight-loss medications if they aren't covered by your insurance or reimbursed through any other source and you have:

A prescription from a healthcare professional
Documentation that the medication is being used to treat a specific diagnosed condition
An LOMN is required by your HSA or FSA administrator
Receipts and documentation to support your expense

FDA-approved prescription weight-loss medications for long-term use include:

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Contrave (naltrexone / bupropion)
Qsymia (phentermine / topiramate)
Saxenda (liraglutide) - GLP-1
Wegovy (semaglutide) - GLP-1
Xenical, Alli (orlistat)
Zepbound (tirzepatide) - GLP-1/GIP dual agonist

Ineligible Weight Loss Expenses

The following weight-loss items are typically not HSA or FSA-eligible:

Diet or organic foods
Nutritional counseling, unless used to treat a specific condition diagnosed by a healthcare professional
Meal replacement drinks and shakes (SlimFast, Boost, and Herbalife)
Spa and health club memberships
Swimming or dance lessons for the improvement of general health
Personal training for general fitness or weight management without a qualifying diagnosis

These expenses are usually considered general wellness and not medical care. The IRS also specifically excludes the cost of food or beverages purchased for weight loss because they substitute for what's normally consumed to meet nutritional needs. But you may be able to include the cost of special food and beverages in medical expenses if all of the following are true:

The food does not satisfy normal nutritional needs
The food is used to alleviate or treat a medical condition
The need for the food is substantiated by a healthcare professional

In these cases, only the portion of the cost above what you'd normally spend on a regular diet is considered eligible.

HSA and FSA Eligible Expenses

HSA- and FSA-eligible healthcare expenses are costs that help diagnose, treat, relieve, or prevent a physical or mental disability or illness. This includes out-of-pocket costs, like copays, medical deductibles, and medical screenings. IRS Publication 502 outlines qualified medical and dental expenses. You can also check with your account administrator to see if an expense is eligible.

In some cases, a recommendation from a healthcare professional can turn an ineligible expense into an eligible one if it treats a specific medical condition. For example:

A weight-loss program is eligible only if it's prescribed to treat a specific condition, like obesity or heart disease.
A gym membership may be eligible if it's prescribed as part of a treatment plan for a condition or if it's necessary to affect a function of the body (such as physical therapy after an injury).

Redeeming HSA/FSA Benefits

If an item is HSA or FSA eligible, you can usually pay for it directly with your account's debit card. If you do not have a card, you can make a claim for reimbursement after you pay for the expense out of pocket. An LOMN may be necessary for your HSA or FSA administrator to approve expenses. If there's any confusion, ask them to confirm an item's eligibility.

Tax Implications

If you use your HSA or FSA for qualified medical expenses, you don't have to worry about paying taxes on those withdrawals. Distributions for approved HSA expenses are completely tax-free.

But if you use your HSA to pay for non-qualified weight-loss items, the amount will be treated as taxable income. If you're under age 65, you'll also face a 20% tax penalty. Once you turn 65, you'll still pay regular income tax on non-qualified HSA withdrawals, but the penalty goes away. With an FSA, there's no IRS penalty for ineligible spending. But your employer may require you to repay the funds. If you're unsure whether an expense qualifies, check with your HSA or FSA administrator before you spend the money.

HSA Eligibility vs. Tax-Deductible

HSA-eligible means an expense qualifies under IRS rules as a qualified medical expense that you can pay for with money from your HSA. If it's HSA eligible, you can use your HSA debit card or reimburse yourself later. Those withdrawals are 100% tax-free.

If an expense is tax-deductible, you can subtract the cost of your expense from your taxable income when filing your annual tax return. This reduces the amount of income the IRS can tax. For medical expenses, you must itemize deductions to receive tax benefits, and you can deduct only the portion that exceeds 7.5% of your adjusted gross income (AGI).

Financial Assistance and Payment Options

Patients choose to pay for weight loss surgery themselves if they do not have insurance or if their insurance does not provide bariatric surgery coverage. Some offices offer competitively discounted self-pay rates for patients who pay out-of-pocket. You may choose to finance your bariatric surgery through any source(s) available to you, including your Health Savings Account (HSA) or Flexible Spending Account (FSA). Some also accept Visa and Mastercard. Payment is typically due in full before surgery is scheduled.

Verifying Insurance Coverage

Bariatric surgery is a financial investment, but using an FSA, HSA, or HRA can make the cost more manageable and provide valuable tax savings. Check your plan rules and consult a tax advisor. In many cases, bariatric surgery is considered a medical necessity and is at least partially covered by most insurance companies, provided the patient meets their requirements.

Additional Reimbursable Medical Expenses

You can pay for certain health care, vision, and dental costs with an HRA, HSA, or Health Care FSA.

HRA

You can use your HRA to pay for eligible medical, dental, or vision expenses for yourself or your dependents enrolled in the HRA. Your employer determines which health care expenses are eligible under your HRA.

Examples of Reimbursable and Non-Reimbursable Items

Alcoholism and drug abuse: Medical expenses paid to a treatment center for alcohol or drug abuse are reimbursable.
Batteries: Expenses paid for the purchase of batteries are reimbursable when they are used for the sole purpose of an item that is also covered. This would include, but not be limited to, batteries for blood pressure machines, wheelchairs, heart defibrillators, etc.
Childbirth classes: Expenses for childbirth classes are reimbursable, but are limited to expenses incurred by the mother-to-be. Expenses incurred by a "coach"- even if that is the father-to-be are not reimbursable (if they are billed separately). To qualify as medical care, the classes must address specific medical issues, such as labor, delivery procedures, breathing techniques, and nursing.
COBRA premiums: COBRA premiums that you pay for yourself or your eligible dependents are not reimbursable under a Health FSA. However, COBRA premiums are reimbursable under an HSA, and may be reimbursable under an HRA. Your employer determines which health care expenses are eligible under an HRA.
Conference: Amounts paid by an individual for admission and transportation expenses to a medical conference relating to the chronic disease of the individual or individual's eligible dependent are deductible if the costs are primarily for and essential to the medical care of the chronic disease. The cost of meals and lodging while attending the conference are not deductible as medical expenses.
Cosmetic procedures: Medical expenses for cosmetic procedures are reimbursable only if the procedure is necessary to improve a deformity arising from, or directly related to, a congenital abnormality, a personal injury resulting from an accident or trauma, or a disfiguring disease. However, medical expenses paid for other cosmetic procedures are not deductible medical expenses under Code Section 213(d), and thus are not reimbursable.
Dental treatment: Medical expenses for dental treatment are reimbursable. This includes fees paid to dentists for X-rays, models and molds, fillings, braces, extractions, dentures, dental implants and the difference in cost from insurance-approved restorations and alternative materials, etc. Veneers are covered only when medically necessary, but are not covered for purely cosmetic reasons.
Doula: Expenses paid for a doula whose primary purpose is for delivery of the infant are reimbursable. Charges where the primary purpose is child care after delivery are not covered.
Ear wax removal: (Effective January 1, 2020, a doctor's prescription for reimbursement is no longer needed); see Over-the-counter medications.
Electric toothbrush: Expenses paid for the purchase of electric toothbrushes are reimbursable when submitted with a medical diagnosis.
Embryo storage: Expenses paid for embryo storage are reimbursable.
Fluoride, prescribed: Expenses paid for fluoride toothpaste or rinses prescribed to treat a specific medical condition are covered.
Guide dog: The cost of a guide dog or other animal used by the visually impaired or hearing impaired is reimbursable.
Hair loss treatments/Rogaine®: Reimbursable when prescribed by a physician for a specific medical condition, but not for cosmetic purposes (that is, to stimulate hair growth).
Herbs: The cost of herbs taken for general well-being are not reimbursable. However, the cost of herbs taken to alleviate a specific medical condition are reimbursable.
Home urine test kit: Expenses paid for home urine test kits are reimbursable.
Human guide: Expenses for a human guide - to take a blind child to school, for example - are reimbursable.
Hypnotherapy: Expenses paid for hypnotherapy are reimbursable when prescribed by a physician as therapy to treat a medical condition.
Impotence or sexual inadequacy: Medical expenses related to the treatment of impotence are reimbursable.
Infertility: Medical expenses related to the treatment of infertility are reimbursable. Eligible expenses may include egg storage, egg donor costs, infertility monitors, in-vitro fertilization, and sperm washing. Surrogate costs associated with a qualified dependent of the taxpayer are reimbursable and may include such things as blood compatibility testing and psychological exams. If the surrogate mother is not a qualified dependent of the taxpayer, the costs that the surrogate mother incurs are not reimbursable.
Insoles: Expenses paid for insoles are reimbursable.
Lead-based paint removal: The cost of removing lead-based paints from surfaces in a home to prevent a child who has (or has had) lead poisoning from eating the paint are reimbursable. These surfaces must be in poor repair (peeling or cracking) or within the child's reach.
Learning disability: Tuition payments to a special school for a child who has severe learning disabilities caused by mental or physical impairments, including nervous system disorders, are reimbursable. Medical diagnosis is required. Also, tutoring fees for a child's tutoring by a teacher who is specially trained and qualified to work with children who have severe learning disabilities are reimbursable.
Legal fees: Legal fees paid to authorize treatment for mental illness are reimbursable.
Lodging and meals: The cost of lodging and meals at a hospital or similar institution are reimbursable if the employee's main reason for being there is to receive medical care. The cost of lodging not provided in a hospital or similar institution while an employee is away from home is reimbursable if four requirements are met: (1) the lodging is primarily for and essential to medical care; (2) medical care is provided by a doctor in a licensed hospital or in a medical care facility related to, or the equivalent of, a licensed hospital; (3) the lodging is not lavish or extravagant under the circumstances; and (4) there is no significant element of personal pleasure, recreation or vacation in the travel away from home. See Nursing home. The reimbursable amount cannot exceed $50 for each night for each person. Lodging is included for a person for whom transportation expenses are a medical expense because that person is traveling with the person receiving the medical care. For example, if a parent is traveling with a sick child, up to $100 per night is reimbursable as a medical expense for lodging.
Maintenance costs: Portion of expense incurred to maintain equipment used to treat a medical condition are reimbursable. For example, the cost of electricity to operate an air purifier when suffering from asthma.
Massage chair: Expenses paid for a massage chair to treat a medical condition are reimbursable.
Mattresses: Mattresses and mattress boards are reimbursable.
Medicines, prescribed: Amounts paid for prescribed medicines and drugs are reimbursable. A prescribed drug is one which requires a prescription by a doctor for its use by an individual. The cost of insulin is also reimbursable. The cost of a prescribed drug ordered and shipped from another country cannot be reimbursed. The importation of prescribed drugs by individuals is illegal under federal law (even if allowed by state law). However, you can be reimbursed for the cost of a prescribed drug that you purchased and consumed in another country if the drug is legal in both the other country and the United States.
Menstrual care/feminine hygiene products: Effective January 1, 2020, menstrual care/ feminine hygiene products are allowed. This may include, but not limited to, tampons, pads, liners, cups, sponges, and other similar products.
Nausea relief: Expenses paid for nausea relief devices such as nausea bands are reimbursable.
Nursing home: The cost of medical care in a nursing home or home for the aged for an employee, or for an employee's spouse or dependent, is reimbursable.
Nursing services: Wages and other amounts paid for nursing services are reimbursable. Services need not be performed by a nurse as long as the services are of a kind generally performed by a nurse. This includes services connected with caring for the patient's condition, such as giving medication or changing dressings, as well as bathing and grooming the patient. Only the amount spent for nursing services is reimbursable. Meals - Amounts paid for an attendant's meals are also reimbursable. This cost may be calculated by dividing a household's total food expenses by the number of household members to find the cost of the attendant's food, then apportioning that cost in the same manner used for apportioning an attendant's wages between nursing services and all other services. Upkeep - Additional amounts paid for household upkeep because of an attendant are also reimbursable.
Orthodontia: Services are reimbursable. This type of service does not fit the normal 'fee for service' arrangements seen with other care, and reimbursement can be made once charges have been billed.
Over-the-counter medicines and drugs: Effective January 1, 2020, expenses are generally reimbursable unless used for general well-being or for purely cosmetic purposes. Over-the-counter medicine and drug expenses that are incurred after January 1, 2020, are generally reimbursable. This may include, but not limited, to acetaminophen, acne products, allergy products, antacid remedies, antibiotic creams/ointments, anti-fungal foot sprays/creams, aspirin, baby care products, cold remedies, (including shower vapor tabs), cough syrups and drops, medicated eye and ear drops, ibuprofen, laxatives, migraine remedies, motion sickness, medicated nasal sprays, pain relievers, sleep aids, teething gels, and topical creams for itching, stinging, burning, pain relief, sore healing or insect bites. Over-the-counter (OTC) items are eligible.
Personal Protective Equipment (PPE): Products to prevent/stop the flow of disease are allowed.
Physical exams: Physical exams are generally reimbursable, except for employment-related physicals.
Plane tickets: Expenses paid for the purchase of a plane ticket for a related hospitalization are reimbursable.
Pre-Adoption Counseling: This counseling is covered as are all services related to adoption.
Psychiatric care: Expenses for psychiatric care are reimbursable. These expenses include the cost of supporting a mentally ill dependent at a specially-equipped medical center where the dependent receives medical care.
Smoking cessation drugs and programs: The cost of drug… be used to pay for thousands of eligible health and care items while saving you money.

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