Transgender Counseling or Surgery: FSA Eligibility

Transgender counseling or surgery is potentially eligible with a Letter of Medical Necessity (LMN) from a physician with a flexible spending account (FSA), health savings account (HSA) or a health reimbursement arrangement (HRA). Transgender counseling or surgery reimbursement is not eligible with a limited care flexible spending account (LCFSA) or a dependent care flexible spending account (DCFSA).

What is transgender counseling or surgery?

Individuals who consider themselves as transgender are those whose internal sense of themselves, such as identifying as a man or woman, directly conflicts with the body they were born in. As such, this feeling of mistaken identity can manifest itself in psychological issues from a young age and can persist into adulthood, which is why many transgender individuals will seek out counseling that may result in medical treatment to make a gender transition down the line.

Transition-related medical care is eligible with consumer-directed healthcare accounts, which was a result of the United States Tax Court's 2010 decision in O'Donnabhain v. Commissioner which ruled that a transgender woman's medical expenses for hormone therapy and sex reassignment surgery were legitimate treatments for GID and therefore tax-deductible under Federal law. As a result of this pivotal court decision, on November 21, 2011, the Internal Revenue Service (IRS) affirmed that transgender people can deduct the costs of hormone therapy and sex reassignment surgery from their gross income as medical expenses for the treatment of gender identity disorder (GID).

How do I obtain a Letter of Medical Necessity for transgender counseling or surgery?

There are a variety of eligible services, such as counseling or therapy, that are covered by consumer-directed healthcare accounts, but if a transgender individual is considering transition-related medical care, he/she will need to obtain a Letter of Medical Necessity from a doctor for it to be covered under their benefits. This must be completed by a physician and the letter must outline how probiotics will be used to alleviate the issue and how long the treatment will last. If the treatment plan exceeds the current plan year, another LMN will have to be provided to the benefits administrator to cover the duration of the treatment.

Eligibility Table

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


Eligible with Rx

Eligible with LMN

Not Eligible


AZ-PROD-WEB02 7/18/2018 6:53:34 AM