IRS permits FSA exercise equipment buys

WASHINGTON--A new Internal Revenue Service information letter permitting deductions for the purchase of home exercise equipment if it is used to treat a physician-diagnosed illness could make it possible for health flexible spending accounts to begin reimbursing participants for such expenses.

Employers have the option of whether to allow such deductions, though, because they dictate plan rules, noted Helen Darling, president of the Washington Business Group on Health.

Still, Ms. Darling said she was encouraged by the ruling because it targets the leading health issue confronting Americans today--obesity.

"It could be a great thing," because it would put the spotlight on the obesity problem in the United States, she said. "With 67% of Americans overweight, we're talking about a lot of people who would qualify."

But there needs to be some way to ensure that the employees purchasing the equipment actually use it, she added.

Health FSAs generally can reimburse participants for expenses that otherwise would count as medical care expenses under Internal Revenue Code Section 213. These include expenses "for the diagnosis, care, mitigation, treatment, or prevention of disease, or for the purpose of affecting any structure or function of the body." Until this year, the IRS did not recognize obesity as a disease.

Ms. Darling said WBGH will survey its members as part of its Institute on the Cost and Health Effects of Obesity to determine how many employers will permit the reimbursements in the FSAs they offer to their employees.