Home Improvements: FSA Eligibility

Home improvements with a Letter of Medical Necessity (LMN) from a medical doctor are eligible for reimbursement with a flexible spending account (FSA), health savings account (HSA), a health reimbursement arrangement (HRA). Home improvements are not eligible with a dependent care flexible spending account (DCFSA) or a limited care flexible spending account (LCFSA).

What are home improvements?

Some examples of home improvements with a medical necessity include elevators, ramps, expanded doorways and wheelchair lifts. Under current IRS regulations, these improvements fall under the status of products necessary to treat a legitimate medical condition. Under [IRS Section 213(d)], these must be "for the diagnosis, cure, mitigation, treatment, or prevention of disease, or for the purpose of affecting any structure or function of the body." Another vital distinction is that if these expenses are permanent improvements that increase the value of the building/property, the excess value is not reimbursable to the account holder.

How do I obtain a Letter of Medical Necessity (LMN) for home improvements?

Home improvements that are required to improve an individual's personal mobility or help them cope with the limits of their medical conditions fall under the classification of capital expenditures, which require further substantiation from a doctor in the form of a Letter of Medical Necessity (LMN). This letter must outline how the account holder's medical condition necessitates the installation of a home improvement to land, building or equipment, as well as how long these improvements will last. If additional home improvements will be needed outside of the current plan year, another LMN will need to be submitted for future reimbursement.

Is a home elevator eligible for reimbursement?

An elevator in the home can be medically necessary in the case of individuals desiring an independent life but facing mobility issues due to age or physical disability. Home elevators are practical additions to the home which can increase its value, and the only reimbursable expenses are those which exceed the amount of value added to the home.

Home elevators enhance accessibility and also allow individuals to move heavy loads between floors. This is often the most appealing aspect of a home elevator. Elevators allow individuals to move quickly and effortlessly between floors of their home, and can carry large amounts of weight, allowing the individual to perform chores and tasks that would otherwise require outside assistance.

Home elevators are usually customizable and can be selected with a variety of options depending on the vendor and configuration of the home in which the elevator will be installed. There are several different mechanical types of home elevator with various advantages and disadvantages, including cost.

Elevators also require inspection, usually every six to twelve months, and routine maintenance and repair. In terms of size, home elevators are about the size of a walk-in closet. Home elevators usually require a machine room too, which can be located in the basement.

If a physician suggests a home elevator is medically necessary due to a medical condition, a Letter of Medical Necessity (LMN) can be obtained for FSA, HSA and HRA reimbursement. This letter must outline how the home elevator will be of benefit.

Eligibility Table

Flexible Spending Account (FSA) Limited Care FSA Dependent Care FSA Health Savings Account (HSA) Health Reimbursement Account (HRA)

Eligible

Eligible with Rx

Eligible with LMN

Not Eligible

 


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