Lactation Expenses Qualify As Deductible Medical Expenses

Ann. 2011-14, 2011-9 IRB

In an announcement, IRS has concluded that breast pumps and other supplies that assist lactation are medical care under Code Sec. 213(d) because, like obstetric care, they are for the purpose of affecting a structure or function of the body of the lactating woman.

Background. Code Sec. 213(a) permits a deduction for expenses paid during the tax year for medical care of the taxpayer, spouse or dependent. An expense is considered for medical care if it is paid for the diagnosis, cure, mitigation, treatment or prevention of disease. The amount of medical expenses an individual may deduct in a tax year is the amount by which her unreimbursed payments for those expenses exceed 7.5% of her adjusted gross income for the year. Under Reg. §1.213-1(e)(1), expenses incurred which are merely beneficial to the general health of an individual are not deductible.

Under an health reimbursement arrangement (HRA) or under a health flexible spending arrangement (FSA), amounts paid for medical expenses and reimbursements for these amounts are excludible from gross income. Similar rules apply for a health savings accounts (HSA) and Archer medical savings account (MSA). The Patient Protection and Affordable Care Act (P.L. 111-148) generally provides that the definition of “medical expense” for purposes of employer-provided health coverage, including HRAs, health FSAs, HSAs, and Archer MSAs, is conformed to the definition for purposes of the itemized deduction for medical expenses.

New rule. Provided that the requirements of Code Sec. 213(a) are met, expenses paid for breast pumps and supplies that assist lactation qualify as deductible medical expenses. Amounts reimbursed for these expenses under FSAs, Archer MSAs, HRAs, or HSAs are accordingly not income to the taxpayer.

Observation: This announcement reflects a reversal of IRS's previous position, as reflected in two information letters released within the past two years (Information Letter 2010-0173 and Information Letter 2009-0033). In each letter, IRS stated that it lacked the authority “to classify breast-feeding equipment as medical care in contravention of current law” and that any such change must come from Congress. These information letters drew strong responses from various Senators and Representatives, who cited the many health benefits to breastfeeding and urged Commissioner Douglas Shulman to reconsider IRS's position.

References: For expenditures that qualify as medical care expenses, see FTC 2d/FIN ¶K-2100; United States Tax Reporter ¶2134.04; TaxDesk ¶346,003; TG ¶18800.