Question of the Week

Posted by BAS - 18 February, 2021

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Q.- An employee asked if the cost of a mail-in ancestry test he just purchased is eligible for reimbursement from his health FSA. Is it?

A.- A medical portion of a health/ancestry test may be eligible for reimbursement from a health FSA, but the ancestry and trait portions are not reimbursable.

The IRS issued the following guidance on these types of expenses-

“… because ancestry services, a non-medical service, must be purchased with health services, we conclude that the price of the DNA collection kit must be allocated between the ancestry services and the health services using a percentage (cost of the health services / total cost of ancestry plus health services). As to the health services, the taxpayer may use a reasonable method to value and allocate the cost of the health services between services that are medical care (such as the testing at the laboratory) and non-medical services or items (such as the reports that provide general information on a test result).”

Topics: Healthcare FSA, Flexible Spending Accounts, HR & Benefit Plans, HR & Benefits News


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