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January 13, 2020

Are Genetic Testing Services a Deductible Medical Expense?

A recent IRS Private Letter Ruling (PLR 201933005) provides a clarification about what types of services qualify as a deductible medical expense under IRC Section 213(d).  Important to note that a Private Letter Ruling (PLR) is only binding on the taxpayer requesting it; but a PLR indicates, to the general public, the IRS’ position on a particular fact situation.

In this PLR scenario, the taxpayer is seeking to use health FSA monies to reimburse costs associated with genetic testing services that includes a DNA collection kit to provide results for purposes of medical care which includes some services reflecting ancestral traits.

In its analysis, the IRS reiterates that to qualify as a deductible medical expense under IRC Section 213(d), the expense incurred must be for the diagnosis, cure, mitigation, treatment, or prevention of disease, or for the purpose of affecting any structure or function of the body.  Generally, medical, laboratory, surgical, dental, and other diagnostic and healing services qualify as Section 213(d) medical expenses.

While part of the costs relating to genotyping in this scenario would be considered medical care under Section 213(d), the reports providing general information of ancestry traits to the individual are not.  Thus, the IRS determined that the taxpayer would have to allocate the price paid for the DNA collection kit between the medical services, such as the lab testing fee, and the non-medical services, such as the reports providing general information.

 

The information contained in this article is provided as general guidance and may be affected by changes in law or regulation. This article is not intended to replace or substitute for accounting or other professional advice. Please consult a CBIZ professional. This information is provided as-is with no warranties of any kind. CBIZ shall not be liable for any damages whatsoever in connection with its use and assumes no obligation to inform the reader of any changes in laws or other factors that could affect the information contained herein.

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