IRS Expands
Weight Loss Deduction

On April 7, 2002 the IRS issued revenue ruling IR 2002-19 which recognizes obesity as an acceptable medical condition and permits weight-loss programs to qualify as a medical deduction under Section 213 of the tax code. According to this ruling, the deduction is available for 2001 taxes and is retroactive to any year in which a taxpayer received weight loss therapy because of medically verifiable obesity, providing they file proper documentation when applying for an amended return.

OPTIFAST® programs provide medially monitored weight management therapy. OPTIFAST weight management therapy improves health while reducing weight. OPTIFAST program staff can provide the documentation participants need to quality for the weight management tax deductions.

How Does this Differ from Last Year's Ruling?
The 2001 ruling recognizes obesity as legitimate disease.
Previously, the IRS only permitted individuals to deduct expenses for medical conditions other than obesity, even if excess weight was the primary cause of their disease.

Types of Deductions
There are two different ways taxpayers can take this deduction, as a gross income deduction or as a Medical Flexible Spending Account deduction.

Gross Income DeductionTaxpayers with medical expenses in excess of 7.5 percent of adjusted gross income personal may take a deduction on individual taxes.

Flexible Spending Account (FSA) DeductionIndividuals who have a Medical FSA may use their current year plan to pay for eligible weight loss expenses (see What is Deductible). The key to FSA claims, is proper documentation from a physician stating the medical condition and treatment plan.

Note: employees cannot change their current FSA election.

What Is Deductible:

• Fees to join a program.
• Fees for periodic meetings.
• Lab fees.
• Examinations by health care professionals.

What's not Deductible:

• Weight-loss programs undertaken to improve one's general health or appearance.
• Weight-loss or diet foods.
• Health club and spa dues or fees.

Further Information:
Revenue Ruling 2002-19 will be published in the April 22, 2002 Internal Revenue Bulletin 2002-16. It is currently available online at http://www.irs.gov/pub/irs-drop/rr-02-19.pdf.

The press release regarding this ruling can be found at http://www.irs.gov/pub/irs-news/ir-02-40.pdf