Priv. Ltr. Rul. 201933005 (May 16, 2019)
Available at https://www.irs.gov/pub/irs-wd/201933005.pdf
In a private letter ruling, the IRS has concluded that certain genetic testing services will qualify as medical care under Code § 213(d). The letter responds to a health FSA participant seeking to purchase genetic testing services and reports regarding ancestry and health. The participant asked whether the amounts spent on the health-related services and reports and the DNA collection kit were Code § 213(d) medical care expenses that could be reimbursed by the health FSA. (The participant did not request a ruling regarding the ancestry-related reports.) According to the letter, the health-related services include genotyping using the collected DNA and reports providing lab results and general information intended to help individuals understand their health risks and encourage them to see their health care providers for further testing, diagnosis, or treatment.
The letter observes that under Code § 213(d), medical care includes the diagnosis of disease, and the term diagnosis includes a determination that a disease is or is not present—even if performed without a physician’s recommendation on individuals not experiencing symptoms of illness (see our Checkpoint article). With respect to the genetic testing services about which the participant had inquired, some of the health-related services (e.g., genotyping) were medical care, while others were not (e.g., reports providing general information). Furthermore, the ancestry-related services were not medical care. Thus, the participant was required to use a reasonable method to allocate the health-related services between medical and non-medical services or items, and the price of the kit between ancestry and health services.
EBIA Comment: Private letter rulings are intended only for the taxpayers that request them and cannot be used or cited as precedent. However, this letter provides helpful insight into the IRS’s current thinking and is consistent with previous informal IRS comments regarding genetic testing. For more information, see EBIA’s Cafeteria Plans manual at Sections XX.D (“Expenses Reimbursed Must Be for Medical Care”) and XX.M (“Table of Common Expenses Showing Whether They Are for ‘Medical Care’”); see also EBIA’s Consumer-Driven Health Care manual at Sections XV.C (“What Is an HSA-Qualified Medical Expense?”) and XXIV.B (“HRAs May Reimburse Only Code § 213(d) Expenses”). You may also be interested in our upcoming webinar “Common Mistakes and How to Fix Them: Cafeteria Plans, Health FSAs, and DCAPs” (live on 9/11/2019).
Contributing Editors: EBIA Staff.