Lactation Expenses Are Now Medical Expenses

The IRS recently issued an announcement stating that money spent on breast pumps and other devices to assist lactation can qualify as deductible medical expenses. This update now means that Flexible Spending Account (FSA), Health Savings Account (HSA) and Health Reimbursement Arrangement (HRA) funds can now be used to pay for these items. In addition, money spent toward these items now counts toward total medical expense costs, which could potentially impact the employees' tax liability. Publication 502, which contains a list of eligible medical and dental expenses, has been amended to reflect this inclusion under Section 213(d).

Though this is certainly welcome news for nursing mothers, you will notice that Publication 502 does not specify the types of supplies that are to be included as eligible medical expenses. After checking with several carriers and FSA administrators, we've concluded that if an item is primarily used to aid lactation (i.e. pump sterilization bags), it is permissable. An item that is multiuse, however, would not qualify. Of course, we encourage employees to check with their plan administrator before making any purchase that they are unsure about.

To help your employees, we created a document in Word for you to customize. You can then use the text provided in an email, as a memo, or attach to payroll stuffers. Download the document here.