Use Tax Free Dollars for Acupuncture

Acupuncture is a Qualified Medical Service under Your HSA

A health savings account (HSA) is typically sold as part of a high deductible health plan (HDHP). Because acupuncture is considered a qualified health service by the IRS with regard to health savings accounts, you can use your benefits card or otherwise pay for eligible acupuncture sessions with tax-free dollars from your HSA account. The great thing is that this is true whether or not your health insurance policy includes an acupuncture benefit. The following are a couple of scenarios that apply for many people.
  1. If your insurance policy includes an HSA but does not include an acupuncture benefit, you may use tax-free dollars from your HSA to pay for the entire acupuncture treatment. Of course you’ll want a receipt or other evidence regarding the service in the event of an audit. HealthPoint can provide copies of single session paid invoices or a listing of payments you make to us throughout the year. And although it may not be necessary, it’s probably also helpful to have a copy of a physician order or referral for acupuncture in your file – again, in the event you are audited.

  2. If you have an HSA type health insurance policy that includes acupuncture as a covered benefit, you may use HSA tax-free dollars to pay that portion of the acupuncture charge that your insurance does not cover, up to the health plan’s agreed fee maximum with the provider for that service. Keep the explanation of benefits that your health plan sends you (or call them and request a copy) as evidence of the charge(s) and your payment portion for your tax records. Services must be determined medically necessary by your health plan before they will pay their portion. For some coverage options, it is not necessary for your annual deductible to be met / satisfied in order for you to use tax-free dollars to pay the portion of your acupuncture session that your plan communicates as your financial responsibility.

  3. Flex spending accounts (FSAs) sometimes reimburse for the cost of Chinese medicine herbal formulas. This benefit can vary among flex spending account programs and you are strongly encouraged to check with your plan administrator. Or you can simply obtain a receipt from HealthPoint, submit it, and see what happens.
You should always check that your coverage is in force and that your policy includes the specific medical service of interest to you in order to increase the likelihood of payment by, or reimbursement from, your health plan. Coverage does not guarantee payment of your claim; your health plan evaluates each claim against their medical necessity criteria before they decide to deny or pay a claim. Also, it is likely that the IRS classification of acupuncture as a qualified health service applies to acupuncture as a medical procedure. For example, your tax return would likely be flagged by the IRS if your supporting documentation included a paid invoice listing acupuncture for your child for the express purpose of increasing his or her SAT scores.

We are providing this information to aid your understanding and management of your acupuncture health benefits and for tax planning. However, please remember that our strong understanding of health insurance notwithstanding, we are not tax professionals. So consult your accountant, tax attorney, or other credentialed tax expert as necessary.

Note that acupuncture coverage and flexible spending often have certain annual visit or dollar amount limits. Any unused benefits or dollars may not carry over to the next year and may instead be forfeited (a use-it-or-lose-it situation). So you'll want to consider whether to utilize your remaining benefits for calendar year 2015 for yourself and/or your family members.

The schedule gets tight during the busy holiday season. If you wish to use any remaining insurance coverage or health spending/savings account dollars for acupuncture or Chinese herbal medicinals prior to the end of the year, please plan ahead and call our office at 952-797-4910 so that we can fit you into the clinic schedule prior to December 31, 2015.

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