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Small Business Employee Benefits and HR Blog

IRS Publication 502 and HRA Eligible Medical Expenses

IRS Publication 502, Medical and Dental Expenses, defines medical care for the purpose of deducting medical expenses and reimbursing medical expenses IRS Publication 502 and HRA Eligible Medical Expensesthrough programs such as HSAs and HRAs. Health Reimbursement Arrangements, or HRAs, are defined contribution plans through which employers can reimburse their employees for eligible medical expenses. 

An HRA may reimburse expenses considered to be qualified medical expenses in IRS Publication 502, including premiums for qualified health insurance policies. This is outlined in IRS Publication 969.

Depending on the HRA plan a business offers, these benefits may vary. Generally, the company will specify which IRS-approved medical expenses are excluded from the plan. These should be listed in the employer's HRA plan document.

Through a Small Business HRA, however, a company provides reimbursement for all of the medical expenses listed in IRS Publication 502.

IRS Publication 502—Definition of Medical Expenses

IRS Publication 502 defines medical care for the purpose of deducting or reimbursing expenses.

According to the IRS, the definition of medical care is as follows:

(1) The term “medical care” means amounts paid—

A. For the diagnosis, cure, mitigation, treatment, or prevention of disease, or for the purpose of affecting any structure or function of the body,

B. For transportation primarily for and essential to medical care referred to sub-paragraph (A), 

C. For qualified long-term care services (as defined in section 7702B (c)), or

D. For insurance (including amounts paid as premiums under part B of title XVIII of the Social Security Act, relating to supplementary medical insurance for the aged) covering medical care referred to in sub-paragraphs (A) and (B) or for any qualified long-term care insurance contract (as defined in section 7702B (b)).

HRA Expense Eligibility

IRS Publication 502 also provides a list of eligible and ineligible medical expenses. See the table below for a summary. 

Description HRA Eligible?
Abortion Yes
Acupuncture Yes
Ambulance Yes
Annual physical exam Yes
Artificial limb Yes
Bandages Yes
Birth control pills Yes
Body scan (for diagnostic testing) Yes
Braille books and magazines Potentially
Breast pumps and supplies (lactation expenses) Yes
Breast reconstruction postmastectomy Yes
Capital expenses to modify your home for a disability   Potentially
Car modifications for a disability Potentially
Child care (for healthy baby) No
Chiropractor  Yes
Christian Science practitioner Yes
Contact lenses (and solution) Yes
Controlled substances No
Cosmetic surgery (medically unnecessary) No
Crutches Yes
Dental treatment (except "teeth whitening," below) Yes
Diagnostic devices (such as diabetes test kits) Yes
Diaper services No
Disabled dependent care expenses Potentially
Electrolysis or hair removal No
Eye exam Yes
Eyeglasses Yes
Eye surgery (vision correction) Yes
Fertility enhancement Potentially
Flexible spending account No
Funeral services No
Guide dog (or other service animal) Potentially
Health institute Potentially
Health club membership dues No
Health coverage tax credit No
Health savings accounts  No
Hearing aids Yes
Hearing-impaired telephone Yes
Hearing-impaired television modifications Potentially
Househould help No
Illegal operations and treatments No
Inpatient hospital services Yes
Insurance premiums Potentially
Intellectually and developmentally disabled housing Potentially
Laboratory fees Yes
Lead-based paint removal Potentially
Legal fees for medical expenses Potentially
Lifetime care—advance payments Potentially
Lodging for medical treatment Potentially
Long-term care Yes
Maternity clothes No
Meals (while receiving medical treatment at facility) Yes
Medical conferences Potentially
Medical information plan Potentially
Medical savings accounts No
Medications (prescribed only) Yes
Medications from other countries No
Nonprescription medication No
Nursing home Potentially
Nursing services Potentially
Nutritional supplements No
Operations (for medically necessary reasons) Yes
Optometrist Yes
Osteopath Yes
Oxygen (necessary for medical condition) Yes
Pregnancy test kits Yes
Premium tax credit Potentially
Psychiatric care Yes
Psychoanalysis Yes
Psychologist Yes
Smoking cessation programs (and prescriptions) Yes
Special education Potentially
Sterilization Yes
Substance abuse treatment (drug or alcohol) Yes
Teeth whitening No
Therapy Yes
Transplants Yes
Transportation (during medical treatments) Potentially
Trips (to receive medical treatments) Potentially
Tuition for special education Potentially
Vasectomy Yes
Veterinary services No
Weight-loss program Potentially
Wheelchair Yes
Wig Potentially
X-ray Yes

For more an interactive expense eligibility tool, check out our HRA Expense Eligibility Guide

Editor's note: This post was originally published August 2013.

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What questions do you have about which medical expenses can be reimbursed? Let us know in the comments section below.

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