Can Your HSA or FSA Plan Pay for Health Coaching Services?
The answer has recently changed!
In the ever-evolving landscape of health and wellness, one question has frequently come up among my clients: "Can we use our Health Savings Account (HSA) or Flexible Spending Account (FSA) to pay for health coaching services?" Until recently, the answer had been a disappointing "no."
However, things are changing, and I have some exciting developments to share.
The Changing Tide
Health coaches have been increasingly recognized for their pivotal role in transforming health outcomes. By guiding clients through necessary lifestyle changes, they have become an integral part of the healthcare system. This is particularly significant considering that 60% of adults in the U.S. are living with at least one chronic disease, while 40% have two or more such conditions, according to data from the Centers for Disease Control and Prevention (CDC Statistics).
Managing and preventing chronic diseases often involve making substantial lifestyle modifications, which can be challenging - especially when you are lacking energy. But with the support of a health coach, individuals can gain the tools and confidence needed to take control of their health and well-being.
IRS Guidance On HSA And FSA Reimbursement for Health Coaching
In a recent shift, the Internal Revenue Service (IRS) has issued new guidance allowing HSA or FSA plans to reimburse the cost of health coaching services, provided certain conditions are met. This is a significant development, as it makes health coaching more accessible and affordable for many people who could benefit from these services.
One of the key requirements is obtaining a letter of medical necessity from your physician. This letter should accompany any receipts for health coaching expenses when you submit them for reimbursement.
More specifically, the Internal Revenue Service (IRS) has provided the National Board for Health & Wellness Coaching (NBHWC) with guidance indicating that out-of-pocket expenses for health and wellness coaching could be considered a "qualified medical expense" if the services aim at treating or preventing a disease.
What this suggests is that if a physician refers an individual to health and wellness coaching as a therapeutic measure for a specific disease they are already battling, or one they are highly likely to develop, then the individual's out-of-pocket expenses for such services may qualify as a deductible medical expense.
In light of the current IRS language, if a client or patient is referred to health and wellness coaching by their physician for the management of a medical condition or disease, the costs associated with these services could be eligible for reimbursement.
How To Leverage This Opportunity
If you're looking to understand more about how to leverage this opportunity, you may want to take these 2 steps:
Step One: Show Medical Necessity
First, request that your physician provide you with a letter of medical necessity for coaching services.
I have reprinted below a sample letter of medical necessity created by NBHWC that your doctor can use as a reference.
SAMPLE LETTER:
The following letter is only intended as a SAMPLE Letter of Medical Necessity that outlines the information a payer/plan may request. Use of this letter does not guarantee coverage for the service. The prescriber (physician) is responsible for the content of this letter and should customize all bracketed information in blue with the appropriate information.
[Physician’s Letterhead]
[Date]
[City, State, ZIP Code]
RE: Coverage for Health and Wellness Coaching Patient: [Patient Name]
Date of Birth: [Date]
Diagnosis: [Diagnosis], [ICD-10-CM]
Dear HSA/FSA Plan:
I am writing on behalf of my patient, [Patient Name], to document the medical necessity to treat their [Diagnosis] with [Coach name, a National Board Certified Health and Wellness Coach at (Coach Business LLC Name / NPI: xxxxxxxxx / EIN: xx-xxxxxxx/ Health and Wellness Coaching Taxonomy code: 71400000X)]. This letter serves to document my patient’s medical history and diagnosis and to summarize my treatment rationale. Please refer to the [List any Enclosures] enclosed with this letter.
Summary of Patient’s Medical History and Diagnosis
[Patient Name] is [Age] years old and was initially diagnosed with [Diagnosis] [ICD-10-CM] on [Date]. [Patient Name] has been in my care since [Date]. [Provide a discussion of the patient’s clinical history, current symptoms and condition, any potential contraindications, and any relevant laboratory test results, highlighting the factors leading you to recommend use of the service]
Rationale for Treatment
[Include your clinical rationale and reasons for prescribing the service]
In summary, [Service Name] is medically necessary and reasonable to treat [Patient Name’s] [Diagnosis], and I ask you to please consider coverage of [Service Name] on [Patient Name’s] behalf. Please refer to the enclosed supporting documents for further details, and do not hesitate to call me at [Phone Number] if you have any questions or if you require additional information.
Thank you for your attention to this matter.
Sincerely,
[Provider Signature]
[Prescribing Physician Name and Credentials]
[NPI Number]
Enclosures: [List any Enclosures]
STEP Two: Consult Your Plan Administrator
This development is based on IRS guidance.
However, it's important to remember that each HSA or FSA plan may have its own specific policies and procedures. Therefore, for any further questions or clarifications, it's advisable to directly contact your HSA or FSA plan administrator.
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A Word Of Caution
While this blog post and the NBHWC sample letter of medical necessity inform you about this recent IRS development, they are not intended to provide legal advice. If you want to see how this impacts you, you can contact your HSA or FSA plan administrator. Otherwise, you can consult with a legal professional or financial advisor for advice tailored to your specific circumstances.
Also, please note that this information is current as of December 2023. I hope to update this post if there are further developments. But, this blog post should not serve as your primary source of HSA or FSA information.
I hope this post is helpful as you plan for how to spend your FSA or HSA funds.
The new IRS guidance is a promising step forward, potentially making health coaching services more accessible to those with HSAs or FSAs. It acknowledges the critical role health coaches play in supporting individuals to make lifestyle changes that can positively impact their health outcomes. By enabling HSA or FSA reimbursement for health coaching, many more individuals may now be able to take advantage of these valuable services.
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