16/12/2024
Service Animal: HSA Eligibility
SERVICE ANIMAL: REQUIRES A LETTER OF MEDICAL NECESSITY (LMN) TO BE ELIGIBLE WITH A HEALTH SAVINGS ACCOUNT (HSA)
The cost for a service animal that is required for medical care is eligible with a Letter of Medical Necessity (LMN) for reimbursement with a flexible spending account (FSA), health savings account (HSA), a health reimbursement arrangement (HRA). Service animal costs are not eligible with a dependent care flexible spending account (DCFSA) or a limited-purpose flexible spending account (LPFSA).
What are service animals?
Animals have long been used to assist individuals who have physical disabilities, such as persons who are blind or deaf, but in recent decades the medical community has embraced companion animals for their profound effects on individuals who experience mental or emotional disabilities.
However, service animals are their own unique distinction and are different from emotional support animals or therapy animals that can be used in a variety of medical applications. A service animal is defined as a dog or miniature horse that is individually trained to do work or perform tasks for a person with a disability. Some examples of this include guiding the blind, calming a person with Post-Traumatic Stress Disorder (PTSD) during anxiety attacks, alerting people who are deaf, pulling a wheelchair, providing assistance during a seizure, providing medication reminders and more. (ADA.gov).
You can use a Health Savings Account (HSA) to pay nearly all costs to train, purchase, and feed a service animal, including paying veterinary bills.
You can’t use HSA funds to pay for a therapy animal. Only for a service animal for yourself, a spouse, or dependent.
HSAs and Service Dogs
You can use your HSA to cover these costs tax-free, provided the service animal ismedically necessary.
“Medically necessary” means the animal must be essential for the treatment, alleviation, or prevention of a disease or condition as prescribed by a healthcare provider.
HSA funds can also cover the service animal’s food, medical bills, and upkeep, as long as these expenses are directly related to the animal’s service functions.
To use HSA funds, you may need a letter of medical necessity (LMN) from your doctor. This letter should state your diagnosis and detail how the service animal helps with your condition.
You should also keep detailed receipts of food, grooming, vet bills, and other expenses related to your service animal.
This way, if the IRS ever challenges you about the validity of your HSA expense, you can document that it was indeed a qualified medical expense.
Can I use HSA funds to pay for a therapy animal as well?
No, you cannot use HSA funds to pay for a therapy animal. Only for a qualified service animal.
HSAs are designed to cover qualified medical expenses as defined by the IRS, and therapy animals, unlike service animals, do not qualify.
Can I use my HSA for a service animal’s expenses if I get the animal mid-year?
Yes, you can start using your HSA funds for qualified expenses related to the service animal as soon as it’s prescribed by a healthcare provider.
That means you can start paying for training and other acquisition costs as soon as you have a LMN from your doctor and place the order. You don’t have to wait until you are in physical possession of the service animal
Disability rights are civil rights. From voting to parking, the ADA is a law that protects people with disabilities in many areas of public life.