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 April 16, 2002 RECENT IRS RULING: TAX DEDUCTIBILITY OF THE COST OF WEIGHT-LOSS PROGRAMS USED TO TREAT OBESITY On April 2, 2002, the Internal Revenue Service (IRS) issued Revenue Ruling 2002-19 holding that individuals may deduct the cost of weight-loss programs in
which they participate in order to treat or relieve a diagnosed disease,
including obesity. While IRS had previously permitted deductions for
the cost of a weight-loss program to treat a specific identifiable disease,
this Revenue Ruing clarifies that obesity itself is a disease. Therefore, an individual
participating in a weight-loss program to treat obesity alone
(without additional health conditions, such as high blood pressure) may deduct
the expense of that program if a physician diagnoses the individual’s obesity
as a disease. Revenue Ruling 2002-19 is available on the following
page of the IRS Web site: www.irs.gov/pub/irs-drop/rr-02-19.pdf
Deductible Costs
Deductible costs would include fees to join a program and to attend periodic meetings. The Revenue Ruling applies prospectively and to 2001 tax returns being filed this year.
Implications for Plan Sponsors
Revenue Ruling 2002-19 means that expenses associated with weight-loss programs to treat obesity can be reimbursed tax-free by an employment-based health plan, or through a flexible spending account (FSA). Claims may now be submitted to an FSA for weight loss program expenses incurred in the current plan year. Of course, in responding to IRS rulings and regulations, plan sponsors should always be guided by their attorneys' advice on the legal issues.
Costs That Cannot Be Deducted
The cost of special food purchased as part of a weight-loss program is not deductible. And, as before, the cost of a weight-loss program is not deductible for people participating just to improve their appearance or general well-being.
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