A recent ruling by the Internal Revenue Service (IRS) now allows for money set aside in a Flexible Spending Account (FSA) or Health Savings Account (HSA) to be used to purchase the health-related information provided through 23andMe’s Health + Ancestry Service.
FSAs and HSAs both allow you to set aside a certain amount of your pre-tax income each year and use those funds for qualified medical care expenses for the FSA/HSA account holder and his or her eligible dependents. Qualified medical care expenses may include such things as co-pays for doctor’s visits, prescription medications, glasses, and sunscreen.
In its new ruling, the IRS determined that a portion of 23andMe’s Health + Ancestry Service is an eligible medical expense. Specifically, 23andMe’s testing services and reports that are eligible are those that are subject to FDA jurisdiction including Health Predisposition, Carrier Status, and Wellness reports.
Since 23andMe doesn’t offer these reports separately from the rest of its Health + Ancestry Service, the IRS provided guidance on how the taxpayer who received the ruling should allocate the amount of their purchase that is medical care. Under this ruling, up to $117.74 of the $199 cost for 23andMe’s Health + Ancestry Service (plus shipping and applicable taxes) is an eligible medical expense. You can use a helpful calculator created by 23andMe to determine the amount that should be eligible by visiting (https://www.23andme.com/fsa-hsa-eligibility/calculator/) and obtain a receipt to submit to your FSA/HSA administrator together with your original purchase receipt.*
Based upon the IRS’s ruling, for existing 23andMe Ancestry Service customers, the full cost of the upgrade to receive 23andMe’s Health reports should be covered medical care. Learn more here.
FSA v. HSA
It’s important to understand that while the definition of what is an eligible medical expense that is covered under both FSAs and HSAs is the same, the eligibility for and terms of these two types of accounts are different. For instance, FSAs are a benefit offered through an employer, and have a lower contribution limit, $2,700 in 2019. For many FSA plans, the money can’t be carried over into the next year, so employees have to “use it or lose it” – that is, if they don’t spend the funds they have set aside, they will lose those funds. HSAs, on the other hand, are available to individuals that are enrolled in a high-deductible health plan (HDHP); the annual 2019 contribution limit is $3,500 for individuals and funds can roll over year to year.
You can find out more about the two types of accounts here.
This ruling recognizes the medical nature of 23andMe’s FDA-regulated Health reports, and may enable you to save on your purchase of the Health + Ancestry Service or an upgrade to receive 23andMe Health reports if you have an FSA or HSA account.
Learn more here.
*Check with your specific FSA/HSA benefits coordinator and/or your tax professional for confirmation on the specific requirements for reimbursement including eligibility, usage, procedures and qualifications.