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Jeremy_Davis

Hot Tub - Note for medical necessity

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I got a call from a participant who is trying to put together his election for the upcoming plan year. His chirporactor told him that if he provides the patient with a note of medical necessity, that it may be able to be run through his flex plan.

This sounded fine at first, but then I asked around the office and it became more complex. It was noted that maybe a home appraisal before and after the hot tub is put into the property may be required. I do not know if he owns or rents. Any thoughts on this?

Thanks

(We're a TPA)

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The hot tub must be treatment for a diagnoised disease or injury, stated so by the treating physician. It can't be for the general health or well being of the patient.

The expense from the FSA is reimbursable only to the extent the cost exceeds capital gains.

It would involved property assesment prior and post purchase/installation/construction costs of the hot tub.

Establishing capital gains requirement would be the same regardless if the expense were used as a medical expense deduction on income tax return or if claimed from the medical FSA.

The benefit of using the FSA is the expense is not required to exceed 7.5% of income that is required for deduction on tax return.

Edited by LRDG

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The hot tub must be treatment for a diagnoised disease or injury, stated so by the treating physician. It can't be for the general health or well being of the patient.

The expense from the FSA is reimbursable only to the extent the cost exceeds capital gains.

It would involved property assesment prior and post purchase/installation/construction costs of the hot tub.

Establishing capital gains requirement would be the same regardless if the expense were used as a medical expense deduction on income tax return or if claimed from the medical FSA.

The benefit of using the FSA is the expense is not required to exceed 7.5% of income that is required for deduction on tax return.

As noted, the hot-tub needs to be of medical legitimacy. I suppose the question you have to ask yourself is whether the doctor has provided the necessary and appropriate documentation and leave it at that.

However, there is also an assumption in your post and in the subsequent reply. It has to do with purchase, installation, home assesments, gain, etc. I have a "portable" hot tub. Made by Softub. It is great, jets are very strong, heater and filter are perfect, my model seats 6 (but maybe 4 adults is a little more comfortable of a number ...) and it is used almost every night. However, because it is considered a "portable" unit, there is no professional installation necessary, no permanancy, no construction, no assesment effect on my home, etc. This is a real possibility for the employee.

Okay - wish I hadn't started writing that - now I'm daydreaming about being in my hottub. Thanks!!! ;)

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Considering the housing values climate, an appraisal and capital gains considerations could be futile. What purpose would they serve if or when the value of the house with addition of the hot tub soon falls to a lower value during the same tax year ?

House value 1/01/2009 $300,000

Mortgage 260,000

Hot tub 10,000

House value 6/01/2009 $260,000

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Despite declining housing market, IRS provides no exception to the requirement that expense is deductible to extent it exceedes capital gains.

The hot tub wouldn't be of much benefit as an investment in the current declining market, potential to lose all it's value with continued decline.

Based on the declining market, it could if anything have a significiently greater tax benefit than a it would in a stronger housing market.

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